Sub-post Offices

HC Deb 12 April 2000 vol 348 cc369-425

Madam Speaker

We come now to the motion on the future of sub-post offices. I have selected the amendment that stands in the name of the Prime Minister.

3.42 pm

Mrs. Angela Browning (Tiverton and Honiton)

I beg to move, That this House condemns the Government's failure to provide a coherent strategy for the future of sub-post offices; expresses concern that nearly a year has elapsed without any solutions to the problems created by the arbitrary announcement to withdraw income from community post offices in return for the payment of benefits; believes that the acceleration of post office closures in 1999–2000 will continue as a result of the Government's policies; applauds the determination of the last Conservative Government to maintain a national network of post offices; supports the computerisation project started by the last Conservative Government to tackle fraud and improve technology available in post offices without cutting their income; calls upon the Government to recognise the social value of post offices to local communities; and now requires the Government, as a matter of urgency, to identify new income streams for sub-post offices in the future and to end the confusion for benefits recipients about the future payment arrangements at local level.

Today, 2,000 sub-postmasters are in London because they fear for the future of their businesses. Nearly a year has elapsed since the Secretary of State announced Labour's Treasury-driven decision to switch the payment of benefits and pensions from post offices to automated credit transfer. Since that announcement was made, there have been many debates in the House; indeed, this is the second Opposition day debate that the Conservative party has introduced.

In the past year, there has been an acceleration of post office closures—double the number the previous year. Post offices are being advised by their banks not to extend their borrowing and we know that the National Federation of Sub-Postmasters fears for the future of 8,000 sub-post offices, which are privately owned businesses at the heart of both rural and urban communities. Indeed, it was shocking to hear at Prime Minister's questions this afternoon that the Prime Minister still seems to believe that Britain's network of sub-post offices is part of a nationalised industry and that it is not made of private businesses that invest their own capital and need to prepare their own business plans for the future.

Mr. John Greenway (Ryedale)

My hon. Friend has touched on one of the most important aspects of this issue. Six post office closures in my constituency have already been announced this year. Four were very much part-time post offices and two were small village shops with a post office. Does she not agree that we are seeing a process that cuts at the bone of the rural network of small businesses that support small village and rural communities?

Mrs. Browning

My hon. Friend is absolutely right. The network is made up of businesses that provide a range of services and they often combine the post office with the village shop. Like everyone else, sub-postmasters have to make business decisions and plan for the future. In the uncertain world that the Government have created, many choose to get out altogether rather than sell their businesses on. That is an indictment not only of the Government's arbitrary decisions a year ago, but of the way in which they have subsequently handled matters.

I want to place Conservative achievements on record. When we were faced with a choice between more savings for the Treasury and ensuring the survival of the post office network, the previous Conservative Government, by contrast with Labour, opted for the more expensive benefit card project to ensure the survival of the sub-post office network for rural and urban communities.

As the National Federation of Sub-Postmasters said in its submission to the Select Committee on Trade and Industry: the decision of the previous Government to automate the delivery of benefits payments using the benefits payment card was based on the need to reduce costs, eliminate fraud and ensure beneficiaries would be able to continue to receive their payment in cash from the post office, thus ensuring they retained a choice as to the method of payment which best suited their individual circumstance … The submission continued: this was recognised to be the only way to ensure the future survival and prosperity of the post office network.

Earlier today, my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) introduced a debate on sub-post offices in Westminster Hall. It is not the first time that he has spoken on this subject in the past year. The fact that he puts on record the background to the way in which the Conservative party introduced the switch from the book to the payment card, and the proposals that this Government inherited, clearly identifies the previous Government's priorities.

My right hon. Friend speaks with the authority of someone who has been Secretary of State in the two key Departments—the Department of Trade and Industry and the Department of Social Security. He said: When I moved to the Department of Social Security, my interest deepened further, as I saw how essential the network was to the effective delivery of benefits to many of the most vulnerable people in our communities. I helped to ensure that that delivery mechanism and the network would continue by agreeing to the horizon project, about which the Government are now trying to rewrite history … —[Official Report, Westminster Hall, 12 January 2000; Vol. 342, c. 52WH.]

Mr. Andrew Miller (Ellesmere Port and Neston)

The hon. Lady will recall that, in the last Parliament, I praised the approach of the right hon. Member for Hitchin and Harpenden (Mr. Lilley) to merging benefits and taxation issues. However, I am not sure that I could praise his handling of the original Horizon project. I have followed its progress from the beginning. Will the hon. Lady put on record the fact that it is Conservative policy to reintroduce the previous plan, exactly as it was, for the system? We will then know precisely what the debate is about.

Mrs. Browning

The hon. Gentleman knows what the Government inherited, and what they did with that inheritance. The Conservative party will consider what we inherit and what we can salvage from the damage and the mess that the Government are creating.

In the past year, we have asked many questions to which we have received few answers. Even today, the Prime Minister failed to answer questions in terms that could provide comfort to the 2,000 sub-postmasters who have given up a day's work to persuade the Government to think again and identify new streams of income to replace the income that has been lost through the Government's policies. We have debated the matter often in the past, but the Government do not intend to listen. I want to focus on the future, because today's debate is about that. That is why sub-postmasters are here today.

Sub-post offices are businesses and, like any other small business, they need to plan for the future. When the Prime Minister received the sub-postmasters at No. 10 this morning, he pointed out that the Government still have many issues to sort out between now and 2005. However, businesses do not have the luxury of time: sub-postmasters have to make business decisions today, and their bank managers are advising them today. What a luxury it is for a Government to think that such considerations can all be kicked into the long grass while they set up another focus group or advisory committee. We know that in the meantime sub-postmasters are going to the wall.

The Government should be focusing on possible extra streams of income for sub-post offices and prioritising those Government services that might be such a source of income in future. However, as we heard again from the Prime Minister this afternoon, this is all about saving money from the Department of Social Security budget, which is a failure if ever there was one, because the Government have not fulfilled the pledge to cut that budget which they made when they came to office.

The DSS and the DTI are packed with former Treasury Ministers who have rolled over and allowed the Treasury to recoup that £400 million, taking it out of the pockets of sub-postmasters, yet Ministers need four years to think up ideas that will enable post offices to plan for the future. In this matter, as in so many others, the DTI ministerial team do not understand how businesses work, and despite all the wringing of hands by Labour Members, they do not care.

Since the last summer recess, I have visited dozens of sub-post offices throughout the country. Only last month, in Sadberge in the Prime Minister's constituency, I visited the small post office, which sells a few groceries and is clearly important to the local community. With the sub-postmaster and the national president of the National Federation of Sub-Postmasters, I posted a letter from that post office to the Prime Minister at No. 10. He did not reply, and I was rather surprised because I should have thought that even he would have time to recognise that in his constituency sub-postmasters are struggling, as they are throughout the country.

The Prime Minister's office sent my letter to the Minister of State, Department of Social Security, who I see is on the Treasury Bench this afternoon. He sent me a two-page reply in which he comes to the crunch and makes a point that may explain why the Government have been so slow in deciding how to help post offices and how they can contribute to replacing their income streams in response to the smash-and-grab raid by the Treasury. The right hon. Gentleman said: Therefore, sub-postmasters' remuneration is a matter between POCL— Post Office Counters Ltd.— and the post-masters themselves. In other words, this is nothing to do with the Government, and yet they have decided to end a contract halfway through its duration and, without giving any notice, they are removing a huge chunk of post offices' income, without the slightest idea of how the loss will be made up, jeopardising post offices and accelerating their closure.

According to the federation, 8,000 small businesses are now at risk, representing about 24,000 jobs throughout the country. If 24,000 jobs were at risk in any other industry, one would expect that the Secretary of State would have set up a taskforce by now, but instead the Minister of State, Department of Social Security, writes to me saying that it is not a matter for the Government.

Mr. John Bercow (Buckingham)

Does my hon. Friend agree that the Prime Minister's Panglossian optimism is singularly misplaced when we recall that the group managing director of banking and customer services at the Post Office, Mr. Stuart Sweetman, said that he is not at all confident that income from other sources will in any way be sufficient to make up for the Post Office's loss of income from benefits as a result of the Government's stupid policy?

Mrs. Browning

My hon. Friend is right, and I have visited an excellent sub-post office in his constituency.

The Government are quick to claim that they are doing something. When the Prime Minister is out and about in the country—I recall his visit to the countryside in the west country a little while back—instead of saying frankly, as we now read in missives from every Department around Whitehall, that it was not a matter for the Government, he tried to placate postmasters by saying that cash dispensers would be installed, and that the Government would sit down and talk, as he said again today. He has had a year to sit down and talk to those businesses, yet we are expected to believe that for once he will come up with something useful.

Mr. Miller

rose—

Mr. Desmond Browne (Kilmarnock and Loudoun)

rose—

Mrs. Browning

I have already given way to the hon. Member for Ellesmere Port and Neston (Mr. Miller); I now give way to the hon. Member for Kilmarnock and Loudoun (Mr. Browne).

Mr. Browne

I am grateful to the hon. Lady. On the contributions to the discussion from Mr. Stuart Sweetman, is she aware that Mr. Sweetman attended a meeting of the all-party group on community banking convened by my hon. Friend the Member for Reading, West (Mr. Salter) on Monday? I hope to tell the House some of what he said, if I am called to speak. In the Committee Room, he explained in great detail the discussions with banks in which he was engaged, which could generate £200 million of income for sub-post offices—hardly a drop in the ocean.

Mrs. Browning

Of course we support any initiative. I must tell the Secretary of State that it is past five to 12, as far as sub-post offices are concerned. As they plan their business for the coming financial year and particularly for the next two or three years, sub-postmasters need to know what other sources of income will be available to them. After a year of inactivity on the Government's part, any activity is to be welcomed. The question is whether it will be enough to save the sub-post offices that are now closing at double the rate at which they closed last year.

Mr. David Heath (Somerton and Frome)

I am grateful to the hon. Lady. Before she leaves the subject of the Prime Minister, did she find it instructive that in his replies earlier this afternoon, he said that there was nothing wrong with the policy—it was just the consequences? Would it not be helpful if the policy touched base with the consequences? The consequences are that there will be no post offices by the time the new technology is available.

Mrs. Browning

The hon. Gentleman is right. It was also noted this afternoon that the Prime Minister made a point of saying that he made no apology. Those on the Treasury Bench are well known for making no apology when they close businesses, put people out of work and create chaos and confusion among some of the most vulnerable people in society. That is the hallmark of the Prime Minister and his Cabinet.

Let us consider alternatives to chaos—[Interruption.] I wrote the speech myself. Unlike the ones that come from Millbank tower, these are all home-made.

There are steps that the Government could take, and they should act quickly if they are to save the post offices. The big question is whether they want to save them. If they drag the process out long enough, the more difficult cases—those that open part time and those that are less viable—will be off the scene altogether by the time the Government produce proper suggestions to help the rest. Given the Government's track record, that seems to be the policy that they are following.

We read in the papers this week a suggestion from the Minister for Competitiveness that sub-postmasters are to become local consuls. We would welcome that, if it is recognition of the other services that postmasters provide in their local communities—the many things that they do, unpaid and unsung heroes and heroines in their communities.

However, apart from proposing that postmasters should be given a smart badge, which presumably was meant to flatter, the hon. Gentleman did not spell out whether there is to be any remuneration for them. If he has a practical business plan to put on the table that would help post offices by allowing them to provide services for which they would be remunerated, perhaps that suggestion would have some credence. This, however, is merely papering over the cracks to disguise the big problem that the Government have brought about.

As we all know, local people rely on sub-postmasters. If someone does not collect their pension one week, the sub-postmaster will notice. The sub-post office is often the calling-off point for the local doctor, who may leave a prescription there at no charge. The value that sub-post offices provide for communities is almost unquantifiable. That is why the last Conservative Government believed it was worth remunerating sub-post offices. We recognised the value of their contribution in the heart of vulnerable communities—unlike the Minister of State, Department of Social Security, who has accused sub-postmasters of telling porkies.

That does not sound to me like the view of a Government who are sitting down and talking to sub-postmasters about their problems. It is certainly not the opinion of the 3 million people who signed the Western Daily Press petition. Whatever the Prime Minister and other Labour Members say, there is now such a groundswell of opinion—clearly demonstrated by the size of the petition presented to Downing street—that the Government must either rethink, or come up with alternative suggestions pretty smartly.

Mr. Miller

Will the hon. Lady give way?

Mrs. Browning

No, I have given way to the hon. Gentleman once already.

The Government must either rethink or come up with alternative suggestions so that these businesses can not just survive, but survive next year. It is as urgent as that.

Mr. Nicholas Winterton (Macclesfield)

Will my hon. Friend give way?

Mrs. Browning

I will indeed.

Mr. Winterton

My hon. Friend is presenting an excellent case. What advice would she give to residents of my hill villages of Kettleshulme and Wildboarclough, which are both in the Peak park, and the village of Higher Poynton, whose sub-post offices will close in the next few weeks? Am I not right in saying that such sub-post offices are critical elements of the success and the on-going potential of rural villages? How will the villages survive if this essential facility is closed?

Mrs. Browning

My hon. Friend is absolutely right. In the rural communities that he and I represent, a fragile situation is deteriorating. He, along with other Members of Parliament, will have made his representations, because there is now a sense of urgency. All our constituencies contain dozens of sub-post offices which are now genuinely at risk, not in three years' time but this year.

Sub-post offices deserve better than the Government's action. It is no good the Prime Minister saying, as he said yet again today, that cash dispensers are the answer. People need bank accounts in order to obtain money from cash dispensers, and if a post office is to have a cash dispenser in the wall there must be a minimum number of transactions a week for it to be viable.

There is another problem, unless the Government announce today that they are to round up all state benefits into multiples of five. In my experience, it is not possible to obtain both notes and coins from a cash dispenser. Pensioners who prefer to draw all their benefit each week so that they can plan how to spend it will not be used to that, but they may now be forced to make more than one visit a week.

Mr. Geoffrey Clifton-Brown (Cotswold)

Mr. Davey, at my post office in Blockley, tells me that what is really threatening his viability is the fact that a circular being sent to all claimants informs them that their benefit must be paid through a bank account. It does not tell them that, if they wish to continue to receive it in cash, they must opt out of the present system. If they do opt out and continue to have the benefit paid in cash, Mr. Davey's transaction payment will be cut from 12p to 1 p. That is what is threatening his business.

The Minister for Competitiveness (Mr. Alan Johnson)

The hon. Gentleman is wrong.

Mrs. Browning

No, my hon. Friend is right. It is true. The Government have made a virtue of the fact that it costs only I p to transfer the money from the Department of Social Security to the BACS system. Apart from that, the Government have given no explanation of where the funding is coming from. There is certainly insufficient funding to make up for the loss of £400 million, which will be lifted out of post offices' revenue. That is where the problem is. The Government have made a Treasury-initiated decision. They do not have a clue how they will fulfil many of the pledges.

The Secretary of State for Trade and Industry (Mr. Stephen Byers)

Will the hon. Lady give way?

Mrs. Browning

I will in a moment.

If the Secretary of State is going to talk us through the payment streams of each transaction movement from the time that it leaves the Department of Social Security, we will welcome that. What is interesting is that the "Dear colleague" letter that we received this week contains no mention of that. One would have thought that, if the Minister for Competitiveness had the answer to that, it would have been a good idea to put it in the letter that was circulated to every Member yesterday.

Mr. Byers

Does the hon. Lady agree that one of the reasons why there was a number of closures last year in the post office network was because of the misleading information put around by a number of Members? [Interruption.] We have just had a very good example of that misleading information from the hon. Member for Cotswold (Mr. Clifton-Brown). Benefit recipients have a choice: if they want to receive the benefit payment in cash at the post office, they will be entitled to do so. It is important that we put the record straight.

Mrs. Browning

I am afraid that the Secretary of State misunderstands the problem for sub-post offices. He has outlined what he believes to be his Government's pledge in relation to recipients. We would grateful if he explained how that will work, but the focus of the debate is income for sub-post offices. In the transaction, where is the income to come from for sub-post offices to make up the money that the Government—

Mr. Byers

indicated dissent.

Mrs. Browning

It is no good the Secretary of State shaking his head. That is where the loss of income will come from. Therefore, he must explain to sub-post offices how they will make up the income drop by way of transactions, for which he has been unable to produce an audit trail to show that money will be into post offices and those businesses.

This morning, in the Methodist hall, I listened to the National Federation of Sub-Postmasters offer the Government—although there was no Government representative there—the hand of friendship.

The Minister of State, Department of Social Security (Mr. Jeff Rooker)

I was there.

Mrs. Browning

If the right hon. Gentleman was there, he kept his head down at back of the hall. I am sorry that he was not noticed.

Those in the hall made it clear that they do not want handouts; they want to do business. They want a plan for the future. They need the Government to behave in a more business-like manner, to negotiate and to make decisions now, not in three years' time.

Tomorrow is the Secretary of State's birthday. I anticipate that he will receive about 18,000 birthday cards, one from every sub-post office, asking him to think again. They will tell him: For your benefit, give us today the answers that will benefit sub post offices—before it is too late. In that spirit of friendship, I offer him a birthday card for tomorrow—the first of 18,000. I hope that he will listen carefully, if not to me, then to the 18,000 sub-postmasters, the 2,000 who have given up a day's work to come here and the petition containing 3 million signatures that the Prime Minister received this morning.

4.9 pm

The Secretary of State for Trade and Industry (Mr. Stephen Byers)

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof: `welcomes the fact that the Government is committed to a national post office network and is taking steps to secure this; welcomes the Government's moves to plan the introduction of automated credit transfer; welcomes the Postal Services Bill which will enable the Post Office to modernise, so building up new business for the network; welcomes the investment of £500 million to ensure the network is computerised, so enabling a successful and modern network to emerge; welcomes the Government's introduction for the first time of criteria for access to Post Office services; welcomes the commitment to give benefit recipients the choice of having benefits paid in cash via a post office even after the switch to automated credit transfer is complete in 2005; and applauds the work of the sub-postmasters and postmistresses and condemns those who make their lives harder by talking down the network.'.

Mr. Bercow

Open the card.

Mr. Byers

If the hon. Gentleman does not mind, I shall open the card a little later. I am also looking forward to the present that comes with it.

I know that the hon. Member for Tiverton and Honiton (Mrs. Browning) and many other hon. Members have had the opportunity today of discussing with sub-postmasters and sub-postmistresses and representatives of the National Federation of Sub-Postmasters their concerns about the future of the post office network. I want to use this opportunity to deal with some of the concerns that have, quite understandably, been expressed by those individuals who often have committed many of their own resources to their business—a sub-post office. We are a Government who listen to the concerns of the communities that have been affected. We have also listened, and we shall continue listening, to the concerns of those who are responsible for running the post office network.

We recognise the vital role that local post offices play not only in rural communities, but in our inner cities. Many thousands of post offices in our inner cities and in our rural communities perform a useful and important community function. We recognise that they have that important role to play.

Very often, the post office is the focal point of the local community, providing access to cash, postal services and other daily items. Very often, for the elderly and those who are less mobile, the post office is where their benefits are available. We recognise that.

Several hon. Members

rose—

Mr. Byers

I shall give way when I have made some progress.

The Government recognise the invaluable role that sub-postmasters and mistresses play in communities and the way in which they develop and deliver those important services. The Government's commitment is to ensure that people have convenient access to the services of Post Office Counters.

The Post Office is still the largest retail network in Europe. Some 60 per cent. of rural parishes have a post office, and more than nine out of 10 people live within a mile of a post office.

Mr. Oliver Letwin (West Dorset)

Before the Secretary of State tires himself, and possibly the House, with repetition of those pieties, will he understand that what we need to hear today is a clear and unambiguous statement that the Government will take time off from their current proposals and develop a serious, workable and practicable alternative?

Mr. Byers

I hope that, once I have had time to make progress in my speech, I shall have dealt with those concerns in a way that the hon. Gentleman will feel is not pious.

Mr. Edward Leigh (Gainsborough)

Will the Secretary of State guarantee that, after 2003, on one side of the counter, when pensioners who currently do not have a bank account are forced to have one, turn up at the post office and draw their pension in cash, they will not be charged any extra money whatsoever—bank charges or anything else? Will they will be in exactly the same position as now? On the other side of the counter, will he guarantee that the sub-postmaster will receive a reasonable reward for the transaction?

Mr. Byers

My right hon. Friend the Secretary of State for Social Security has already addressed that issue. [HON. MEMBERS: "What is the answer?"' The answer is yes. I hope that that will go a long way towards reassuring the hon. Gentleman and his constituents. That is the policy, and my right hon. Friend has already stated it.

Mr. Alan Duncan (Rutland and Melton)

Will the Secretary of State then explain to the House exactly what the components and total of the sub-postmaster's income deriving from that process will be?

Mr. Byers

I was answering the question of the hon. Member for Gainsborough (Mr. Leigh) on a "reasonable" amount. These matters are all subject to negotiation. We are talking about something that will occur in 2003, which is some years away. There will be a process of discussion. We have a very good working relationship with the national federation, which enables us to talk about the details of implementing the transition to automated credit transfer, and we shall do that. However, the answer to the specific question of the hon. Member for Gainsborough is, quite simply, yes.

Mr. Mike Hancock (Portsmouth, South)

I was grateful for the Secretary of State's comments on the plight of urban post offices. I should be grateful if he explained to me and those of my constituents who visited Westminster today what choice will exist for those who can exercise a choice under the proposals, but who, in doing so, rob someone else of the choice of being able to continue to use the post office's facilities, because the post office will no longer exist? The viability of urban post offices is very much under threat, and many will disappear. In my constituency, probably half of them will go within two years of implementation of the proposals, unless the Government come up with a plan that will not only give security to postmasters, so that they can continue operating, but allow people to exercise choice in how they receive and use their benefit.

Mr. Byers

I was rather confused by the hon. Gentleman's question. There will be a choice. The Government are not prepared to compel people to have their benefits paid in cash at a post office. We are not in the business of compulsion. When we move to ACT between 2003 and 2005, people will retain the choice that they have now. Benefit recipients will continue to have a genuine choice.

Several hon. Members

rose—

Mr. Byers

I have a choice; I must give way to the right hon. Member for South Norfolk (Mr. MacGregor) first.

Mr. John MacGregor (South Norfolk)

What choice will pensioners have if by 2003 many sub-post offices have closed and there is no longer one nearby?

Mr. Byers

The right hon. Gentleman raises an important point. Post office closures have nothing to do with the move to ACT in 2003. However, changes to the network have continued for decades. Over the years, some post offices close and others open.

The hon. Member for Tiverton and Honiton made great play of the fact the number of sub-post office closures last year doubled compared with the year before. The figures show that closures have not doubled, although 383 sub-post offices closed last year. If she looks at the record, she will realise that the highest number of closures in the past 20 years was back in 1984–85, under a Conservative Government. Closures happen because sub-post offices are businesses and people have to take business decisions. It is only right and appropriate that they do so. Any closures that happen today are not because of ACT, as that will not happen until 2003. In the period leading up to 2003, the Government intend to identify a new way forward for the network.

Mr. Patrick Nicholls (Teignbridge)

Will the Secretary of State give way?

Mr. Byers

I must make some progress, but I shall try to give way to the hon. Gentleman a little later, when I have explained the new role that we believe the post office network can play.

The clearest demonstration of the way in which we want to develop the post office network is the fact that we are investing £500 million in equipping all post office counters with modern online computer facilities. We are giving the Post Office the commercial freedom that it needs to develop new services. Our Postal Services Bill allows for social and environmental guidance, providing the vehicle for guidance on access to post office services. That is why the performance and innovation unit in the Cabinet Office is carrying out an extensive study on how we can ensure a viable future for the post office network.

Mr. Patrick McLoughlin (West Derbyshire)

I remind the Secretary of State of what he told the House on 15 February. He said that it was a question of viability and added: The Government will consider very closely the need to include a provision that would enable a subsidy to be provided where appropriate to do so. Indeed, there will be a Government amendment to that effect.—[Official Report, 15 February 2000; Vol. 344, c. 805.] Why did the Government fail to table that amendment in Committee?

Mr. Byers

We have been considering the detail of such a proposal. I shall address the question of providing a subsidy a little later in my speech. I hope that I shall be able to give some comfort to sub-postmasters about the Government's intentions. There was never a subsidy under the Conservatives. Later this afternoon, I shall announce that when we consider the Bill on Report next week, we shall introduce the provision that I promised the House. We are doing that because we consider it such a significant development that we feel that it is appropriate to deal with it in front of the whole House, rather than in Committee where only members of the Committee can consider it. It will go a long way to reassure many of the sub-postmasters who are in London today that we are listening to their concerns and prepared to respond accordingly.

Several hon. Members

rose—

Mr. Byers

I want to make some progress. I have given way many times and I want to put on record the Government's approach to these important matters.

Many people, including those in the federation, recognise the importance of modernising the network. The Conservatives did nothing to help the Post Office to prepare for the challenges ahead. From 1992 to 1997, they frequently announced their policy to sell off Parcelforce and review the status of the rest of the Post Office business; but they did not even do that.

This is an important point, because it strikes at the heart of the money that has been made available to the post office network: by 1995, the Treasury had taken £1 billion from the Post Office. Over the next two and a half years, an additional £1 billion was taken from the income received by the Post Office. That money could have been used to invest in the network, but the Treasury came first with the Conservatives.

Under this Government, £500 million is being invested in the Horizon project and computerisation. We are helping the Post Office to adapt to the changes that are taking place, but that means taking what are often difficult decisions. We have heard the concerns about our decision to cancel the benefit payment card and move progressively to ACT as the norm for benefit payments between 2003 and 2005. That is the sensible way forward.

I want to explain the background to our decision. The previous Government committed themselves in 1994 to modernising how benefits are paid, and in May 1996 an eight-year contract was awarded under the private finance initiative to ICL Pathway. The aim was to automate post office counters and provide a secure and more efficient way of paying benefits, through a card.

By early 1997, still under the Conservative Administration, it was clear that the project was in difficulties. We inherited those difficulties. In late 1997, the project was incurring cost overruns of £600 million and was three years behind schedule and we had to consider whether it could be continued. We undertook a detailed review and in 1998 we tried to put the project back on course, but slippages continued. In October 1998, the key milestone for the start of live trials of the system was missed yet again. There were real and increasing concerns that, even if the card could be delivered, the technology was becoming increasingly out of date.

Mrs. Browning

Why, then, as late as November 1998, did the Secretary of State's predecessor say: I feel confident that the project will be properly completed.?

Mr. Byers

Because at that stage we were trying to put the project back on course. Following a further review early in 1999, we decided that the benefit payment card could not continue, because the problems had become overwhelming. We made the tough but right decision to stop the benefit payment card element of automation and instead to build on the existing ACT system as a means of paying benefits.

It is worth reminding the House that ACT was introduced and extended by the Conservative Government, for good reasons, not to threaten the Post Office network but to ensure that payments went to those who needed them in the most secure way possible.

Mr. Miller

My right hon. Friend should not attack the hon. Member for Tiverton and Honiton (Mrs. Browning) in such a way, because at least what she said contained more sense than the comments of the Leader of the Opposition, who said earlier that he wanted to reintroduce the system as originally planned. That would be crass stupidity. The previous Government told us on numerous occasions that we could not introduce new services for post offices through Government because those were commercial decisions for the Post Office.

Mr. Byers

My hon. Friend is right and there is a conflict at the heart of the Conservatives' position on the issue. They introduced and extended ACT as a way of delivering benefits, for what were good and legitimate reasons. People have voted with their feet and have chosen to have their benefits paid into bank accounts. In November 1999, 50 per cent of new retirement pensioners chose ACT, and 54 per cent. of new child benefit customers did so. People are making that choice and the Government cannot and should not ignore those trends.

Mr. Nicholls

On 29 March, I put it to the Minister of State that the Government's assurances about the continuation of cash payments after 2003 were on the basis that the recipients would have a bank account. Being the honest man he is, the Minister of State dodged that question and would not address it. Is the Secretary of State now confirming that everyone will have to have a bank account after 2003, and that the Government will fund that; or is he saying that the Government have received an assurance from the banking industry that it will provide free banking? It can be only one of those two—which is it?

Mr. Byers

No, we recognise that for some benefit recipients—those who do not want, for whatever reason, to have bank accounts—we will need to have an alternative method. For those people, we are considering what alternative simple electronic money transition systems could be introduced that could be accessed through post offices. We are having this debate in April 2000 and migration to ACT starts in 2003, so we have the time—because we have given plenty of notice—to put in place a mechanism that will ensure that all those who do not have or want bank accounts have an alternative means by which their benefits can be paid.

Several hon. Members

rose—

Mr. Byers

I am not going to give way, because Opposition Members have had their chance. I have been generous in giving way, but they have sought to mislead so much in their interventions—inadvertently, I am sure.

Mr. Roger Gale (North Thanet)

There are 3,000 sub-postmasters out there who want answers.

Mr. Byers

They will not get an answer from the hon. Gentleman, but they will get one from my speech.

The reality is that all benefit recipients who wish to do so will continue to be able to access their benefits in cash at a post office, both before and after the change to an ACT-based system. I repeat that we shall put in place a mechanism so that both before and after 2003 all benefit recipients and state pensioners who want to will be able to access the exact amount of their benefits in cash across the counter at the post office, without incurring a charge for doing so.

The Opposition may wish to compel people to have their benefits paid through post offices, but we do not accept that. People must have a genuine choice and that is what we intend to offer.

Mrs. Browning

I heard the proposals that the Secretary of State outlined for recipients, but how much will that be worth in income for sub-postmasters?

Mr. Byers

As the hon. Lady knows, no figure has been agreed and the contract remains to be negotiated. It is a commercial transaction and the figure will be reached in the normal course of negotiations. [Interruption.] They are businesses and the negotiations concern a commercial arrangement. I shall not take part in the negotiations. Does she not understand that? The Government intend to ensure that the benefit recipient has a choice. She needs to be aware of that. We are having useful discussions with the National Federation of Sub-Postmasters about our broad approach to ACT and the new services that can be offered. The Post Office will discuss with the federation the detail of the agreements that are entered into. Contractual negotiations will take place, and there are many months between now and 2003 during which they can be concluded.

Mrs. Browning

If it is a commercial transaction that is a matter for business and not government, how is it that the Prime Minister takes credit for the installation of 3,000 cash dispensers?

Mr. Byers

I cannot see what relevance that has to the issue that has been raised. The hon. Lady made an important point when she talked about the amount per transaction that a sub-postmaster is to receive as a result of the changed circumstances. I am saying that that is a subject for commercial negotiations between the Post Office and the sub-postmaster. No doubt she will try to explain what that has to do with cash points. We are talking about different issues.

There are new opportunities for people to go to a post office and use its services. As I have said, benefit recipients will still be entitled to have their cash paid over in full in pounds and pence. People such as me will be attracted to post offices to get money from cash machines. I may spend some of that money in the shop, which is often linked to the cash machine and the post office. That is what should happen.

Mr. Duncan

Will the right hon. Gentleman give way?

Mr. Byers

No. I have already given way to the hon. Gentleman.

Mr. David Heath

I think that the right hon. Gentleman is making progress on this issue now. We look forward to his comments on subsidy later in his speech. The key issue is whether the Government will underwrite the integrity of the post office network. If, on the basis that it is purely a commercial matter, they are not prepared to do that, we shall lose the network. Will he underwrite it?

Mr. Byers

We intend to address the issue through access criteria, which the performance and innovation unit report will disclose some time after Easter. That is how we can address people's need for local post office counter services. Access criteria can then be considered by the Post Office regulator when that person is in post. That is the appropriate way to consider the matter. It is all about access to the services that can be offered through the post office network.

Mr. Frank Roy (Motherwell and Wishaw)

In my constituency, 80 per cent. of post offices depend for more than 50 per cent. of their business on the Benefits Agency. Any opportunity to increase their business will be most helpful. As for Link cash machines, will they not provide more business opportunities for sub-post offices? Those people who do not use post offices now will be able to when they are installed. They will then be able to spend the money that has been dispensed in the post office.

Mr. Byers

My hon. Friend is right. That is why the development of cash machines in post offices has been widely welcomed by the National Federation of Sub-Postmasters. It is a good example of the post office network taking a more commercial view of the new streams of income that can come into the network. It is important that we consider new ways of encouraging people to go into a post office and using the services there provided as well as those provided by the shop, which often runs alongside it. As a result, the sub-postmaster and the shop owner—often one and the same person—will have the dual benefits.

Mr. Duncan

We seem at last to be concentrating on the kernel of the issue. As a result of his policy, the Secretary of State will replace a certain, guaranteed, Government-sourced income for post offices with an uncertain, commercially negotiated one on which he cannot at present put a figure. Yet he says that their income will remain reasonable. Those two points do not stack up.

Secondly, if the commercially negotiated income is insufficient, the post office network will collapse. What will constitute a reasonable income, and by how much does the existing income of sub-post offices need to fall for the Secretary of State to deem it to be unreasonable?

Mr. Byers

The hon. Gentleman did extremely well to deliver that question without breaking into a smile. His views on the Post Office are well known. He wants to go down the route of privatisation. We know that the post office network receives financial support from the Post Office. That is the reality: if Opposition Members think otherwise, they are fundamentally wrong and do not understand how the system works. He is on record as saying that he wants to break up the Post Office and then privatise it. That view is shared by the hon. Member for Gainsborough, who has always argued for that option, as have many other Conservative Members.

We have to ensure that, where appropriate, the post office network has proper support. Our proposals in the Postal Services Bill will give the Post Office greater commercial freedom.

Mr. Leigh

Will the right hon. Gentleman give way?

Mr. Byers

I will let the hon. Gentleman into the debate in a moment. I know his views, which he has stated clearly. He is a man of principle on these matters and it will be useful for the House to hear his views. They may be quite helpful to me, too, so I shall be more than happy to give way in a moment.

The Postal Services Bill gives the Post Office greater commercial freedom. The real question is whether the Post Office will want to support the social role that the post office network can play. That is a real issue, and the Government intend to address it. In a moment, I shall inform the House about how we might do that, but I am sure that hon. Members will want to hear from the hon. Member for Gainsborough first.

Mr. Leigh

I am grateful to the Secretary of State for giving way, but he must be fair about this. When I worked at the Department of Trade and Industry with my right hon. Friend the Member for Henley (Mr. Heseltine), the proposal was to privatise the Royal Mail. We recognised that sub-postmasters had always been private operators. There was never a proposal to privatise Post Office Counters. We always recognised that we had to maintain a national network of sub-post offices.

The Secretary of State must stop repeating that the Conservative party wants to privatise the whole set-up and that everything will go to wrack and ruin. That has never been our proposal.

Mr. Byers

The hon. Gentleman probably makes my point for me. He wanted to take Royal Mail and parcel delivery away from the Post Office. That would have broken the link with the post office network and put nothing in its place. That would have had a detrimental effect on the post office network, and it is one of the reasons why the network was so worried about the Conservative proposals. The then Prime Minister would not go down that route because he was worried about its political implications.

Mr. Martin Salter (Reading, West)

On my constituency office wall, I have a letter from the right hon. Member for Henley (Mr. Heseltine), the former Deputy Prime Minister. He was replying to a member of the National Federation of Sub-Postmasters, which vigorously opposed Conservative plans to privatise Royal Mail. In the letter, the right hon. Gentleman stated quite simply that he believed that the post office network should be privatised.

Mr. Byers

It is good to have that on the record. I hope that my hon. Friend will circulate that communication and not keep it pinned up on his notice board.

Mr. Tim Collins (Westmorland and Lonsdale)

Will the Secretary of State give way?

Mr. Byers

I will give way once more, but then I want to draw my remarks to a close. I also want to talk about the important matter of the financial assistance that we may be able to offer to the post office network.

Mr. Collins

I want to return to the vital issue of the income stream. What does the Secretary of State say to my constituent Mrs. Hilary Pavitt, the sub-postmistress of Kent's Bank post office near Grange-over-Sands? She says that she will lose more than a third of her income under the Government's proposals. Is he guaranteeing to replace all that lost income?

Mr. Byers

I have two points to make. First, the hon. Gentleman's constituent will need to convince those who presently receive their benefits in cash to continue to do so. I am sure that she has a good relationship with them, so she need only tell them that they have a choice. People who want to continue with the status quo and have their benefits paid in cash are entitled to do so. They will continue to have that choice until 2003, between 2003 and 2005, and beyond 2005. That is what I would advise her to do to ensure that her customers stay loyal and keep receiving their payments in cash.

Secondly, the hon. Gentleman's constituent needs to know that her post office will be automated as a result of a £500 million Government investment. She will be able to offer new services, which will result in new people coming in to her post office. That will give her new vision for the future. I hope that she will recognise that this way will provide her with opportunities that she does not have at the moment.

Mr. Nicholas Winterton

Will the right hon. Gentleman give way?

Mr. Bercow

Will the right hon. Gentleman give way?

Mr. Byers

I will try to if I have time, but I have already spoken for far longer than the hon. Member for Tiverton and Honiton, and I want to provide Back Benchers with the opportunity to contribute.

I want to take right hon. and hon. Members through the subsidy. If the hon. Member for Buckingham (Mr. Bercow) has any further questions, he may put them after I have gone through how it will work.

I have already, I hope, made it clear that benefit recipients who want to continue to have benefit paid in cash in full at the post office will still have that choice. Next week, we will table a new clause to the Postal Services Bill when it is debated on Report. It will enable me to set up a financial scheme to ensure that essential services can still be delivered through a nationwide network of local post offices. Our key target is a viable future for the network. We want to ensure that the Bill covers all possibilities. It may well be that in future, because of changes that are being introduced, financial assistance should be offered to the network.

The power is a safeguard, intended to keep open the option of financial assistance. The Government believe that the Post Office should modernise the network and be able to provide new and updated services and products, developing alternative revenue streams to replace income that may be lost because of the transition to automated credit transfer beyond 2003.

We recognise the real concerns of many people throughout the country about continued local access to post services, particularly in rural areas and also in some of our inner-city areas. The new clause will provide an additional safeguard in the Bill to provide financial assistance if it proves necessary to do so. This underlines the Government's commitment to a nationwide network of post offices.

Mr. Winterton

I am sure that the Minister for Competitiveness will, if asked, tell the Secretary of State that some Conservative Members were not in favour of the privatisation of Post Office Counters. I happen to fall into that category. The then Government did not proceed with privatisation because of the number of Conservative Members who opposed it.

The Secretary of State is announcing some very encouraging proposals. Sub-post offices in rural villages are as vital as the village school and the village pub. Will the right hon. Gentleman assure me that his proposals will ensure that they survive so that our rural areas have the facilities that they need?

Mr. Byers

The important thing is that, through the amendment that we will introduce on Report, we are providing a mechanism that will allow financial assistance to be given. It does not exist at the moment, but we will put it in place. There will be opportunities to provide financial support if it is appropriate to do so. I am sure that it will make a big difference to many small rural post offices as well as some in the inner cities. It is a safeguard, and we intend to introduce it next week.

Mr. Bercow

Will the right hon. Gentleman give way?

Mr. Alasdair Morgan (Galloway and Upper Nithsdale)

Will the right hon. Gentleman give way?

Mr. Byers

I have already given way generously, and I want to draw my remarks to a conclusion.

The hon. Member for Tiverton and Honiton said that I can look forward to 18,000 birthday cards arriving tomorrow. I understand that this is also good news for post office workers in Victoria SW1, who are likely to receive a bonus—negotiated by the Communication Workers Union a few years ago—as a result of the high volume of cards that I am likely to receive. They will have cause for celebration as well.

The network of post offices has never been static, but the Government must acknowledge the important community and social role played by individual post offices to which we should provide new opportunities. We can use the great strengths in the post office network to reach out to people and to give them access to information and services.

I want to see how we can use the local post office as the first source of information on central and local government services. We need a new vision for the Post Office of the 21st century. I want the local post office to interact directly and electronically with business, and to be a channel of delivery for electronic government. With the new technologies that we are giving to the post office network, all that is possible.

By giving the Post Office greater commercial freedom, investing in new technology and providing safeguards to ensure reasonable access to Post Office Counters services, we are helping the Post Office to adapt to change, expand its services and respond to changing consumer demands. We intend to work with the Post Office. As my right hon. Friend the Prime Minister said this morning to Colin Baker, the general secretary of the National Federation of Sub-Postmasters, we intend to work in partnership to meet the challenges that lie ahead.

Mr. Peter Lilley (Hitchin and Harpenden)

Will the Secretary of State confirm that he is talking about the possibility, for which there is as yet no substance, of replacing a loss of revenue that is certain and definite? Will he confirm that the Horizon project, as now truncated, deals only with the internal management and revenues of sub-post offices, and that it as yet does not have the functionality to deliver the banking and other services of which he has speculatively spoken? Will he confirm that he will not even go out to tender to obtain the necessary software until later this year?

Mr. Byers

The problem that we inherited was that the scheme concocted by the right hon. Member for Hitchin and Harpenden (Mr. Lilley) was three years behind schedule. Our project will deliver automation for every post office by spring 2001. In addition, the changes that I intend to introduce to the Postal Services Bill next week will provide a safeguard and a mechanism. Even if we have to use that mechanism, we shall not have to do so until 2003, when ACT is introduced. We are giving plenty of notice of change, which will continue from 2003 until 2005.

For more than 150 years, the Post Office has been an important part of the social fabric of our country. The Government are committed to ensuring that it continues to play an important role in British society by building a modern, vibrant network fit for the future. We shall deliver that, and I commend the amendment in the name of the Prime Minister.

4.48 pm

Dr. Vincent Cable (Twickenham)

I welcome the debate and pay tribute to the National Federation of Sub-Postmasters, which has assembled one of the largest petitions ever presented to Government. It has been extremely successful in promoting its agenda, for which, as a small organisation, it deserves great credit. Colin Baker came up with a phrase this morning that captures, in many ways, what is so important about the network. He described postmasters and postmistresses as the general practitioners of Government, the people who provide communities with government services. The network comprises not just a group of small businesses that have fallen on hard times, but people who play a key role in communities.

We must focus on what is happening in businesses. Much attention has been devoted to the decline in numbers, but that is just the tip of the iceberg. Anyone who talks to people who work in the post office network will confirm that behind those who have sold up stand many more who want to sell but cannot because of the collapse of asset values. Many more people would sell up their businesses if they could.

The Secretary of State made the particularly unhelpful suggestion that much of the crisis was caused by scaremongering by Opposition Members and others. We are talking about rational, hard-headed small business men and women who can make rational calculations about their future earnings and the value of their assets. If they have a crisis of confidence, it is because there is a crisis of confidence. That is what the Government are being called on to redress. We call on them to give a clear, unambiguous guarantee and undertaking to preserve the network. What the Secretary of State said today about subsidy is helpful, and it is an advance, but the Government still need to do a lot of work to remedy the crisis of confidence that underlies the closure programme and the collapse of asset values.

We keep coming back to the issue of the loss of income and what it means—what is the money flow. The answer to a question asked by my right hon. Friend the Member for Yeovil (Mr. Ashdown), the former leader of my party, established that the loss of income by 2005 would be about £640 million. We have used the figure of £400 million, but it would be due to rise to something of that magnitude. That is the income that is being lost to the post office network.

It is useful to break down that figure and analyse what it consists of. There are two main elements to it. One is genuine technological advance. The automated credit transfer process is a technological advance; it replaces a cumbersome paper-driven operation with electronic switching. There is a real gain in productivity there, and no one seriously argues that that process should be stopped. The other element in the £640 million is the payment that would otherwise be made to the post office network for performing a genuine service, which will still have to be performed by someone.

My colleagues and I have been trying to establish through letters and questions to the Department of Social Security the split between the technological improvement and the fee income to the post office for services. It is a clear question, and the DSS does not deny that such a distinction can be made. However, it has told us that it is a commercial secret. That raises a fundamental issue. We are dealing with a transaction between a Government Department and a state agency, albeit a limited, incorporated entity, which the Government choose to regard as a matter of Government confidentiality.

Some colleagues will recall that we voted a few evenings ago on whether information leading to advice, as well as the advice itself, should be kept secret. We have a good practical example here. Information crucial to an understanding of the debate is being unnecessarily withheld. The issue will be pursued with the ombudsman, but we have great difficulty understanding what is going on, because the Government simply refuse to divulge the split between the technological gain and the remainder of the fee income.

Mr. Browne

I am listening with care to what the hon. Gentleman says and much of it I agree with. I understood the Secretary of State to say that the figure to which the hon. Gentleman refers was not yet known, so the split could not be specified. If I have misunderstood, perhaps the hon. Gentleman could point that out to me. I, too, am a great advocate of freedom of information, but unless the information exists, it cannot be withheld. Until the negotiations are concluded, the information cannot exist.

Dr. Cable

It is a perfectly fair question. I will happily copy to the hon. Gentleman a letter from a Mrs. J. Spiller of the DSS, who acknowledges that the information is available, but says that she will not disclose it because it is commercially confidential. That is a matter of record.

The Minister for Competitiveness, who has responsibility for postal services, is fond of using an analogy that is quite helpful. He talks about the need for the Post Office Counters network to achieve a soft landing. One has a mental picture of an aeroplane with him at the controls and the runway in the distance. I think that we can see the outline of the runway, which consists of a new income stream that will come from a mixture of online government, banking services and so on. That is fine and clear. However, the problem with that mental picture is that the Minister is flying an aircraft that has no undercarriage—it has no wheels. The problem with the Government's story is how that landing can take place.

One of the key aspects is the replacement of the present income stream with one from banking services. That is an important and welcome part of the story. We need to break down those banking services, to find out what they are, how they will be provided and what benefit the network will derive from them.

The banking services have two distinct elements. One is the 3,000 cash machines, which are welcome if they provide an additional facility. However, there is still a question about the many people—especially in remote areas—who will continue to pay a charge for that service. Even if Barclays and the rest move away from their £2.50 charge, the hidden loyalty charges will remain. The public will not receive a free service—the bank will derive income from it.

A more serious and important development—although it is welcome—is that 10 banks have agreed to use the Post Office Counters network for the provision of banking services. That is an advance and represents a significant new vision for postal services. However, why are the banks doing that? After all, Barclays and the rest are closing down thousands of branches throughout the country. Why are they entering into agreements with the DSS or the Post Office to open up such services? The banks are not charities—as we are painfully aware. Sir Peter Middleton and his chums are the most hard-headed bunch in business. Why are they doing that?

One obvious reason is that the agreements represent an extremely good deal for the banks. Instead of providing traditional bank branches, with all their overheads, security costs and business rates, the banks will acquire a cheap facility inside post offices—while keeping their brand. As the Government are in a weak negotiating position, they will not ask much for that service.

The banks will gain in other ways. As people will be encouraged—we are told that they will not be coerced—to have bank accounts, new accounts will be opened. They will bring the banks deposits and spreads on those deposits. The banks will earn charges. Banks will do extremely well from the shift to automated teller machines, and from the provision of banking services. We should be asking the Government—and they should be asking the banks—whether they are getting the best of that bargain with the banks.

The broader context is important. Many questions are legitimately being asked about the operation of the banking system. The Cruickshank report referred to estimated excess profits of £5 billion—in other words, rates of return to shareholder value that are larger than the market—for an industry that does not run full commercial risks, because, of course, banks and their shareholders are underwritten by the lender of last resort. We are talking about a system which has excess profits and is not fully competitive muscling in on the closure of the post office network to earn a nice little penny.

Although I welcome the vision—the development of the post office network from mere post offices to centres for online government and for banking services—will the banks be required to make sufficient payment to the network for that service? I fully accept and welcome the idea that the taxpayer has to pay a subsidy for the post office network, but the banking system also has a social obligation—to deal with the problem of financial exclusion. Are the Minister and—especially—the Chancellor paying adequate attention to the extent to which the banks, as well as the taxpayer, have a financial obligation to maintain the network as it is?

The key issue raised by Members on both sides is that the post office network needs an absolute guarantee of its future. That guarantee will be partly met from subsidy and when the access provisions are identified. However, until then, the crisis of confidence will continue; asset values will continue to fall; and there will be continued closures in all our constituencies.

4.59 pm

Mr. Robert N. Wareing (Liverpool, West Derby)

When I read the first words of the motion— That this House condemns the Government's failure to provide a coherent strategy for the future of sub-post offices— I could hardly believe my eyes, because those words come from a Tory party which, throughout its 18 years in government, was responsible for a colossal reduction in the numbers of sub-post offices, and indeed post offices, in this country.

During the Tories' period of office—more specifically, between March 1979 and just before the most recent general election—the number of Crown post offices declined from 1,580 to 606 and the number of sub-post offices from 21,213 to 17,731. In other words, over the 18 years of Tory Governments, there was a reduction of about 3,500 post offices. I therefore find it a bit rich that the Tories now have the audacity to suggest that they are the friends of the sub-postmasters. It was they who wanted to sell 51 per cent. of the shares in Royal Mail—in other words, to privatise Royal Mail—and no doubt it was the widespread outrage that was expressed at the time by employees and customers that caused the then Government to retreat. Frankly, they were more concerned with providing for profit than for public service.

Dr. George Turner (North-West Norfolk)

I wonder whether my hon. Friend is aware that, in the Postal Services Bill Committee, the Opposition spokespeople still argued time after time in favour of privatisation as their preferred solution for the Post Office. Is he aware that they are still sticking to that policy? I believe that that was the last time there was a major deputation to Parliament on behalf of the postal services.

Mr. Wareing

I am sure that that is the case, because in a debate in the House on 21 November 1994, the right hon. Member for Henley (Mr. Heseltine), who at the time was Deputy Prime Minister, at column 353, gave us the reason for dropping the privatisation proposal: not that the then Government did not believe in it, but that there was too small a majority to get it through the House of Commons.

Mr. Brian Cotter (Weston-super-Mare)

The hon. Gentleman may share my concern that, in the Committee considering the Postal Services Bill, the Conservative Opposition proposed an amendment to reduce the threshold for the universal requirement for packages from 20 kg to 10 kg. That would have hit hard at the universal service, which is of great importance to rural services and the whole community. It was a clear indication of a desire to privatise.

Mr. Wareing

As I did not serve on the Committee, I did not know that, but it is the sort of thing that I would expect. However, having said that about the attitude of the Tories—who are, in a sense, irrelevant to the debate—I shall move on.

There are very important grounds for concern. The announcement that, gradually, more and more benefit recipients will have to enter the banking system is probably the hottest issue in my constituency and throughout Liverpool.

I should like the Government to review their policy in light of several matters. Those who have a notion that, by the year 2005, a majority of the people in my constituency will have bank accounts fail to take into account the social variations between the area that I represent and other parts of the country.

The Library of the House of Commons published an interesting research document. It shows that it is not so much rural areas that will suffer, although I have no doubt that many villages will face difficulties. If my right hon. Friend the Secretary of State and his colleagues were to examine the research paper, they would see that the 20 constituencies at the top of the vulnerability list are almost all in urban areas.

My constituency is rated the 10th most vulnerable, but what do we mean by most vulnerable? In my constituency, there are 15 post offices and, in 13 of them, more than 40 per cent. of the work is related to the payment of benefits. A substantial proportion—87 per cent.—of the post offices in my constituency depend considerably on benefit work. At the bottom of that league table are constituencies such as South-West Surrey, Sevenoaks, Tunbridge Wells and Kensington and Chelsea. They are richer areas and fewer people in them depend on benefits. The consequences of the switch to payments through bank accounts are likely to be dire for my constituency.

Consideration should be given to social variations, and I recommend that my right hon. Friend the Secretary of State consult the list that I have described. No one is against post offices and the Department of Social Security making use of technological advances, but we must consider in detail how such advances will affect customers and employees.

Mr. Lindsay Hoyle (Chorley)

I am sure that my hon. Friend recognises that people have the right to have their benefits or pensions paid in cash. That is an absolute must. We must also guarantee a nationwide post office network and ensure that we do not lose it or allow it to wither on the vine in the way the previous Government did.

Mr. Wareing

I agree with my hon. Friend. I believe that the Government are sincere in their desire that there should be a proper choice between going to a bank or to a post office and between receiving benefits and pensions in cash or having them paid into a bank account. However, they have not taken into account social variations between different parts of the country.

Mr. Letwin

Will the hon. Gentleman give way?

Mr. Wareing

I shall give way shortly.

For example, car ownership in my constituency is far below the national average, so many people rely on public transport. I know that pensioners in Liverpool receive, as they do in London, free public transport, but many people on income support will find it extremely costly to go to a bank, because there are only three bank branches in my constituency. There are moreover six wards in my constituency; in three of them there is not a single bank branch.

Mr. Gale

Will the hon. Gentleman give way?

Mr. Wareing

The hon. Member for West Dorset (Mr. Letwin) tried to get in first.

Mr. Letwin

The hon. Gentleman expresses much common ground between all parties. However, does he acknowledge that no one accuses the Government of lacking good will? The problem is administrative; the Government have simply not worked out how to achieve the result that they seek. Does the hon. Gentleman agree with us and hon. Members of all parties that there should be a delay in implementing the arrangements until the new administrative system has been worked out?

Mr. Wareing

I agree, to the extent that the hon. Gentleman agrees with me about examining the details of the scheme more closely. However, he would doubtless privatise the Post Office. Our agreement founders at that point.

Mr. Gale

The hon. Gentleman referred to the lack of bank branches. Can he deal with the point on which the Secretary of State refused to give way to me? Why are the Government so hell-bent on implementing a costly programme to transfer pension payments to banks, which are reducing the number of branches in the hon. Gentleman's constituency and mine, when the junior Minister wrote to hon. Members today to extol the virtues of the Horizon programme? It has been rolled out in every sub-post office, which could deal with precisely the sort of transaction that the hon. Gentleman's constituents and mine want handled locally.

Mr. Wareing

The hon. Gentleman may have a point. However, the Postal Services Bill has not been enacted yet, and the problems that the hon. Gentleman and perhaps other hon. Members face in their constituencies already exist. They do not result from changes in the way in which benefits are paid.

I am worried about the sick, the disabled and the elderly in my constituency. A post office has already closed there, although that was the result of vandalism, not the problems that will beset post offices under the current proposal.

Of course my constituents can go to a post office and draw cash under the proposals, provided that the post office exists. A move from a cash system of payment at the post office, which many of my constituents desire, means that those post offices will close down. Not only post offices, but nearby shopping areas suffer. The post offices will suffer not only through the change in the payment of benefit; their sales of newspapers and cigarettes will also suffer, and a whole range of shops in the area could be affected. Economic activity will decline and more jobs will be lost. The Government should tackle that problem.

The Post Office currently has a monopoly on services up to £1. The reduction to 50p is bound to have an effect and to endanger not only sub-post offices, but other businesses in the area.

Mr. Nigel Evans (Ribble Valley)

Does the hon. Gentleman accept that, given that 500 post offices closed last year, and given the uncertainty of the impact of the changes on their profitability in future, many decent people who have put their life's savings and work into post offices are now witnessing the value of their businesses depreciate greatly? Those who want to sell them cannot get the money that they need for their businesses.

Mr. Wareing

I am not sure whether the figure of 500 that the hon. Gentleman cited is correct. He would probably be more convincing if he were able to offer options other than privatisation, because that would cause high Post Office prices.

We must remember that industrial relations in the Post Office have been transformed in recent years. [Laughter.] I do not know that the departure of the Minister for Competitiveness had anything to do with that. I am sure that he would have contributed to the improvements that have resulted from the measures to enhance competitiveness which arose from the negotiations between John Roberts, the Post Office chief executive, and Derek Hodgson, the secretary of the Communication Workers Union.

The union members readily accepted the new measures that were introduced by the union and management combined, but I do not believe that that acceptance will continue if we move away from the payment of benefits to recipients through post offices. Indeed, industrial relations are likely to suffer.

There are 15 post offices in my constituency. I fear that if the measures are implemented, those in areas such as Muirhead avenue, east and Baycliff road—as well as the Dog and Gun post office—will not survive for long because there are high rates of high unemployment and sickness and they depend on the payment of benefits such as disability benefit.

I hope that the Government will take heed of what I have said. The Tories' contribution to this debate is irrelevant, given their ideological commitment to privatisation, which is opposed by almost every Post Office employee. I have received representations from many people in my constituency, where this is a hot issue. I have also received representations from the Communication Workers Union, postmasters, the Liverpool chamber of commerce and, of course, the National Federation of Sub-Postmasters, which is leading the lobby today.

It is not enough to defeat the hypocrisy of Conservative Members, who have shed crocodile tears. I beseech the Secretary of State and the Under-Secretary to listen to the people in our heartlands, where there is real opposition to the proposals on benefit payment changes.

5.18 pm

Sir Peter Emery (East Devon)

I wish to express considerable concern that the Secretary of State's speech did not reflect the real fear of tens of thousands of sub-postmasters and mistresses about their future and that of their business. I must tell the hon. Member for Liverpool, West Derby (Mr. Wareing) that the biggest ever red herring is the idea that the Conservatives want to privatise the post office structure. Does he not realise that sub-post offices are already privatised because they are private businesses? I have never been in favour of the privatisation of the Royal Mail. Indeed, at this moment, that is not part of the Conservative programme. We must ignore that red herring.

There is a lack of understanding on the part of Ministers of the role that sub-post offices play in the community, whether in Liverpool or in my villages, such as Dolwood and Southleigh, way out in the country. Part of the role of sub-post offices in the community is the payment of benefit.

I circulated a questionnaire to the 36 sub-post offices in my constituency. I want to tell the House about the feelings of those postmasters and postmistresses. They want a guarantee that they will be able to sustain their businesses in the future. That is not an unreasonable request from any business, whichever party one supports.

Some realistic suggestions have been made, which have not received sufficient emphasis in the debate. Local authorities have the right to give rate relief to sub-post offices. In many areas, that is not done completely. In my area, East Devon district council gives rate relief of 50 per cent. It would be much better for sub-post offices if they were given 100 per cent., as that would assist them generally.

Sub-post offices need to be able to generate greater income, and there are ways in which that could be done. The Government should arrange for sub-post offices to issue vehicle tax licences. There is a demand for that service, especially in the countryside, where people are some way away from a major post office where they can obtain a tax disc. Passport forms should also be available from sub-post offices. Why not? These small matters are not being considered in the debate, but they are realistic and would help the remuneration of sub-postmasters.

There was talk of subsidy. How much? How is it to be dealt with? Has it been agreed with the Treasury? I hope that the Minister who replies to the debate will clarify the matter.

Few people know about the banking services that are already offered through post offices by Lloyds TSB, the Co-op and Alliance & Leicester. That is not advertised nationally on television, and only customers of post offices and sub-post offices would know about it. More publicity should be given to the availability of banking services.

The suggestion that cash machines should be installed in post offices overlooks the fact that the people most likely to use them are the elderly. I wonder how many elderly people who do not have a bank account or a piece of plastic understand the operation of a cash machine and would know the PIN number needed to operate it. Such matters must be considered when we speak about elderly people, particularly those whom I see in my constituency, whether in the better areas of Budleigh Salterton or out in Dolwood, Southleigh and such places.

What about the possibility of taking out of a bank machine cash other than in notes? Many pensions are not rounded to a sum that would be payable in notes alone. I do not know of bank machines that will deliver £56.50. What will happen when an account is overdrawn? Does it become overdrawn? How is anyone to know? None of that has been considered fully.

I do not think that the hon. Member for Liverpool, West Derby (Mr. Wareing) would be at all happy if his constituents could not obtain their cash on a weekly basis. They need the money in order to run their homes, and they will not be willing to receive it on a four-weekly basis. That has not really been considered either.

The Government seem to gloss over the idea that all this will come about when ACT is operating in 2003 and 2005. I can tell Ministers that I shall not be in the House of Commons then, but I can also tell them that many small post offices will be out of business by that time. There is no point in preparing a system for a group of businesses that will not be able to sustain their operations.

Fear of what is to happen has driven down the value of sub-post offices. It is now six times more difficult for sub-postmasters and sub-postmistresses to sell their businesses than it was four or five years ago. Until now many people, on retirement, have bought sub-post offices, run them for some years using their savings as income, and supported themselves for the rest of their lives with the income from the sale when they have handed them on. Over the past few years, a host of post offices in my constituency have had to close because no one could be found to take them on.

I appeal to the Government to start being more practical, and to come to grips—as any business man should—with the problem of how to extend the incomes of sub-postmasters and sub-postmistresses. It is possible, with a little lateral thinking. If the Government could do that, I believe that thousands of people who are outside Parliament today would be very much happier.

5.28 pm

Miss Geraldine Smith (Morecambe and Lunesdale)

I am struck by the sheer effrontery of the Conservative party. You were in power for 18 years, but you did absolutely nothing for the Post Office. I marvel at the sheer arrogance of it. You have collective amnesia.

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. When the hon. Lady uses the word "you", she is addressing me, and I have nothing to do with these matters.

Miss Smith

I apologise, Mr. Deputy Speaker.

For 18 years, the Conservative party did nothing for the Post Office. I know, because I was employed in the postal industry, that the Conservatives did not take one significant step to help the industry. A Post Office review took place between 1992 and 1997, but there was no outcome. The issue of privatisation was a shambles: was the Post Office to be privatised or not? If it was to be privatised, where would that leave the Post Office Counters network? Where would it leave the small sub-post offices?

The Conservatives are engaging in sheer opportunism. I will take no lessons from them about post offices. They cared nothing for the post office network; only of late have they begun to show some concern.

Mr. Duncan

Perhaps the hon. Lady could explain in all conscience why my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), when he was Secretary of State, chose the more expensive option of protecting the very network that we are debating?

Miss Smith

The more expensive option? To protect what? Let me go through some of the points in case Conservative Members have forgotten. Do they recall that, between 1985 and 1995, the Post Office was forced to hand over £1 billion of profits to the Government and that, despite having announced in March 1995 that they would reduce the burden on the Post Office, they subsequently hugely increased it and demanded a further £1 billion from the Post Office? Do they not realise that that money could have been invested in the Post Office network? We could have had computerisation of sub-post offices years ago. We should have had it years ago. The Conservative party caused unnecessary delays and, of course, there is the privatisation shambles.

Perhaps the Tories will remember that, during their 18 years in office, about one fifth of the Post Office Counters network was closed. They seem to have forgotten all about that. I worked in the industry throughout that period and I can recall no significant Tory Government measure to prevent the widespread closures. I recall no comments from Conservative Members at that time. They now have the cheek to say that we have no strategy or policy on the Post Office. What is their policy? Perhaps the hon. Member for Rutland and Melton (Mr. Duncan) will tell me.

Perhaps Conservative Members will tell me what their plans were for the Post Office. Were they going to privatise? During discussions on the Postal Services Bill, they said that they wanted privatisation. Today, Conservative Back Benchers have said they were not going to privatise and would not privatise if they got back into power. They seem confused about the whole issue of the Post Office.

Mr. David Drew (Stroud)

Besides the confusion on the Opposition Benches, with Front Benchers saying that they are in favour of privatisation and Back Benchers saying that they are not in favour of it, Conservative Members say that they support the universal service obligation in the Bill at the same time as saying that they want privatisation. The two are not compatible.

Miss Smith

They certainly are not. Privatisation would have completely wrecked the sub-post office network. We have heard that sub-post offices are private businesses. They are, but they depend on the public side of Post Office Counters. I used to do stock requisitions for sub-postmasters, and used to send money to sub-post offices and do audits. I worked for a public organisation, the Post Office, not for a private company.

Sub-postmasters face problems that need to be resolved. Last Friday evening, I held a meeting with sub-postmasters in my constituency. The fact that more sub-postmasters were at that meeting than there are Members in the Chamber says something about the strength of feeling.

Sub-postmasters are concerned because there is a period of uncertainty. I understand that. No one likes change; it is difficult, particularly if people do not know what the future holds. I accept that some sub-postmasters may be having trouble selling their businesses because the future is uncertain. At the earliest opportunity we need to give as much information as possible to those people, so that they can carry on with their businesses.

ACT is already happening. To do nothing about it would leave sub-post offices to wither on the vine. They are already losing business. We know the arguments. All hon. Members know that, every year, sub-post offices lose business and close. We have to do something about it, and we have to offer them new business.

There is no point in Conservative Members going on about the payment of benefits, because we have to find other types of business, such as banking, for sub-post offices. Sub-postmasters and postmistresses do not want subsidies or hand-outs. They want new business, and I believe that we can help them to find it. Barclays and other banks are closing many branches, creating a real role for sub-post offices to play, especially now that they are being computerised and have the technology necessary to link up with other systems.

I visited a post office in my constituency and saw its new computer system, which is very good. Although of course they are having some teething problems, the system—it is a simple one—is generally working well. However, it needs to be connected with other systems, so that the sub-postmaster can offer banking facilities.

At my meeting on Friday, most of the sub-postmasters said that they would like to have a people's bank, which would not only be a community facility, but would offer a whole new opportunity. We need to help provide that opportunity. Sub-postmasters and postmistresses should be able to offer a cash-back facility to those who pay with a Switch card. We should examine the possibility of placing more lottery terminals in sub-post offices. We also need to provide more information to sub-postmasters on precisely how automated credit transfer will work. Until we can answer those questions, and until sub-postmasters have that information, there will be fear and uncertainty.

Mr. Evans

Having talked to the sub-postmasters and postmistresses in her constituency, the hon. Lady will appreciate that income from benefits payment sometimes constitutes 60 to 70 per cent. of a post office's income. She is therefore absolutely right that postmasters need more sources of income, derived from providing different services. Does she not agree, however, that the drive to move benefits payment from post offices to banks should be deferred until those new services can be offered?

Miss Smith

The hon. Gentleman does not seem to realise that ACT is already happening. When new pensioners are asked how they would like their pension to be paid, very many of them already opt to receive it in their bank account. We cannot re-invent the wheel. The change is already happening. The Government are grasping the nettle by saying, "This change is going to happen, so we have to find alternatives for sub-post offices."

Those alternatives will have to be found, and timing is crucial in doing so. Sub-post offices must have new business before ACT is implemented. If that new business is not in place, ACT should be delayed. However, we have three years to go before implementation. The Horizon project is already up and running in most sub-post offices. The initial difficulties with the project have been overcome, and the project is working well. We are now moving to the second stage, when we have to find new banking and other work for sub-post offices to take on. I believe that that is achievable in three years. I am sure that, at the end of the debate, my hon. Friend the Minister for Competitiveness will be able to tell me what progress has been made.

I welcome the Government's access criteria, which will guarantee postal services for everyone. I realise that the status quo is not an option but, as I said, it is essential to get the timing right. New business needs to be in place before ACT is implemented. I believe that we can find that new business, and that sub-post offices have a bright future.

5.39 pm

Mr. John MacGregor (South Norfolk)

There are 120 towns and villages in my constituency. Some are very small and have never had a sub-post office and others have not been able to sustain one over the years, but a large number have one: there are 59 in all. I will not be able to give all the names as some colleagues have done, because it would simply take too long.

Like my right hon. Friend the Member for East Devon (Sir P. Emery), I recently conducted a survey of all my sub-post offices. I asked people whether, if the situation continues as at present, they will have to close their sub-post office. In an 80 per cent. response, 60 per cent. said either that they definitely will or that they probably would. Even allowing for some exaggeration, that is a very high figure. Of that 60 per cent., 45 per cent. said that they definitely will. The danger is that all the footfall trade for the village shop is lost, so not only the sub-post office but the shop will go.

My remarks are based on that survey and on all the responses that I have had both from sub-post offices and from many of the constituents who use them. Some hon. Members have commented on the fact that sub-post offices have closed over the years. Of course they have, given the changing commercial pressures and life styles and the fact that so many alternatives are available and so many communities are too small to sustain them.

I readily acknowledge that that happened under the Conservatives, too, but the average during our years in office was 143 closures a year, and compared with that trickle we now face a flood. With the loss of the benefit payments on which sub-post offices are so dependent, many will close in the near future. That is why I share the concern of both Government and Opposition Members about the impact on the more disadvantaged, including elderly pensioners in rural areas who do not have a car. About 10 to 25 per cent. of households in villages in my constituency do not have cars.

That is why I said to the Secretary of State that the argument about pensioners having the choice of getting their pension in cash or through the bank will be an unreal one if the anticipated closures go ahead. There simply will not be a sub-post office there to dispense the cash. I share the concerns about the impact on people who are very dependent on their sub-post office. I shall not quote any of the many letters that I have received on the subject, because it would take too long.

The real problem is not the fact that there is a three-year gap until 2003, when the ACT system comes in, but people's perception that it is on the way. The hon. Member for Twickenham (Dr. Cable) made the point very effectively that sub-postmasters are already aware of the likely fall in income that they will have to face. Many of them get very little income out of the sub-post office side of their business in any case. They foresee running into loss and they want to get out now. They will make that decision now unless they are given some clear idea of where future income will come from.

The Government have not yet found a satisfactory answer to that. I agree entirely with what my right hon. Friend the Member for East Devon and the hon. Member for Twickenham said about some sub-postmasters trying to sell and finding it extremely difficult, with grim consequences for their lifetime's savings and investment.

People are acutely aware that the substantial income that comes from dispensing benefit payments will disappear. It is as though they are being told to get on the plank and that they will have to jump off in three years' time, without knowing whether there will be a safety net or how far they will fall. The problem is that they cannot step off the plank and find an alternative, because they do not know what they are going to do with their businesses.

I recognise that some of the sub-post offices would have gone anyway. They are often run by elderly people who perhaps cannot cope with the new computer era and will get out either by retiring normally or because they cannot cope with the pressures. However, younger people, who are computer literate, will not take on the job, so the sub-post office will go.

I deal now with the alternative services. I entirely agree that the potential for such services exists, and it is important that they be built up. However, I am bothered by the pious claim that such services will replace altogether the income that currently stems from benefit payments. I have studied carefully the letter from the Minister for Competitiveness sent to us on 10 April and other comments that he has made about the matter. The difficulty is that none of the alternatives look really viable and no figures have been attached to them.

For example, 3,000 cash machines will be installed, which is obviously desirable for the communities that they will service. However, 18,000 sub-post offices are threatened, and I suspect that few of the 59 in my constituency will get a cash machine. It is not a real answer, and many sub-post offices would also face technical difficulties in the installation of the cash machines.

The option that pensioners will have in the future of still being able to opt for cash payments will be a problem for the reason I have already given—many of the sub-post offices will close in the meantime—and because we do not know how that option will operate. Much of the thrust of questions from my right hon. and hon. Friends has not concerned the position of pensioners, on which the Government have given a guarantee, but the income flow for sub-post offices. We are told that that will be the subject of a commercial agreement, but the situation is so uncertain that, frankly, that is not much comfort to sub-postmasters, given what they will lose. That is also unlikely to be the answer.

The provision of alternative banking services has potential as part of the solution. The sub-post offices have a network that should be able to pick up a large portion of the business that Barclays and other banks will lose through their regrettable closures. However, some real difficulties arise. Technically, it looks as though much of the necessary software will not be put in place until 2005. That is far too long for sub-postmasters, who are seriously considering their future, to wait. I have not seen any conclusive analysis of the situation, but it seems that alternative banking services will not be a credible replacement for the loss of income that the post offices envisage. I am told that the estimate is that they will replace at most half of the income from benefit payment.

Another alternative, as my right hon. Friend the Member for East Devon rightly mentioned, is the provision of other public services, such as driving licences, vehicle licences and passports. I am sure that the Minister is considering such issues and that it will be part of the unit's work. However, I suspect that that option will also face limitations and will not be enough to replace the loss of the benefit payment income. I wholly support all that is being done to look for alternative services, but they will not replace the 35 to 40 per cent. of income that the sub-postmasters know they will lose.

My final point concerns the need for the Government to give the guarantee that the sub-postmasters seek that the income they will lose in 2003 will be replaced. I should say first that I agree with my right hon. Friend that all the issues that have been raised about privatisation are a red herring and totally irrelevant to this debate. That is not only because the sub-post offices are privatised already, but because the income that will be lost comes from the public sector. It is the income that the sub-postmasters receive for delivering benefits. The question is whether private sources will supplement that income sufficiently to sustain the sub-post offices, or whether the Government should do something with public money to replace those payments.

Miss Geraldine Smith

The right hon. Gentleman says that privatisation is irrelevant and a red herring. Does he honestly believe that if Post Office Counters was privatised it would keep such a large network of post offices in rural areas? Would it subsidise small sub-post offices? The banks tell us what would happen if the Post Office were run by a private organisation. It is a public-private partnership, not a privatised business.

Mr. MacGregor

The hon. Lady has missed my point. We are talking about the loss to sub-post offices of payments from the public sector. They come not from post offices but from the Benefits Agency. That is why privatisation is irrelevant to the issue. The loss of business from the Benefits Agency is causing all the worry among the sub-post offices.

My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), in an admirable speech in Westminster Hall this morning, drew attention to the central issue. I recommend all right hon. and hon. Members who were not present to read it. My right hon. Friend was speaking from great experience as a Treasury, Department of Trade and Industry and Department of Social Security Minister. He said that the solution lies in the DSS area. When he was faced with the proposition to move to automated credit transfer, he was told—I am sure this is right because I have had experience of various Departments, too—that if he carried through the entire project as it is now being proposed, the loss of £400 million would close most sub-post offices.

My right hon. Friend went for an alternative solution, and that was the swipe card. I have received letters from the sub-post offices in my constituency asking why we do not go for that solution. Those who have written these letters say, "That was the solution that would have protected us and we support it", but we are told that it has run into great technical and other difficulties. For example, there are difficulties of delay and in terms of practicalities, and therefore it is no longer practical to pursue it. I do not know whether that is the position and nor does my right hon. Friend, although he has some doubts about how hard the project was driven by the Labour Government. Also, I do not know whether there are real issues that cannot be resolved.

Dr. George Turner

The right hon. Gentleman has talked much sense, but is he really proposing that the future of the Post Office lies in yesterday's technology? That is what he seems to be saying. Is he a supporter of the privatisation that his Front-Bench colleagues are urging? Is he supporting measures that will reduce by half the parcels that can be delivered within the present single cost structure? Is he supporting those on the Opposition Front Bench?

Mr. MacGregor

It is obvious why I think that the privatisation issue is a red herring in this debate. However, I and many of the sub-post offices that have responded to me understand the importance of keeping pace with technology. They welcome the arrival of computers under the Horizon programme, for example. The problem lies with the loss of payments that were previously coming through the benefits system.

My right hon. Friend the Member for Hitchin and Harpenden went for a solution that would have cost the taxpayer or the Treasury, however one likes to put it, about £200 million. I am talking in broad figures. The remainder of the £200 million under the £400 million would have been saved by moving away from the paper system to a swipe card, so there would be a cost to the taxpayer.

I now come to exactly the point that the hon. Gentleman raises.

Mr. Letwin

Does my right hon. Friend agree that it is almost inconceivable that the swipe card should be impossible to deliver? Is it not rather the case that it is seen as something of a bore, and that the management systems for delivering it turned out to be rather inadequate? Is not the answer for Ministers to try to improve the management?

Mr. MacGregor

There are two ways of approaching the matter. Unfortunately, because I have not been party to any of the internal discussions and negotiations, I do not know what went on. However, my hon. Friend is right—one approach would be to go back and look at the matter again. I suspect that the DSS and the DTI came up against a problem with the project itself. The Treasury realised that there was an opportunity to grab the whole £400 million. My right hon. Friend the Member for Hitchin and Harpenden resisted that because he recognised the impact on sub-post offices. If I were in the position that my right hon. Friend was then in, I would still be driving exactly along that line. The other approach is to look to replace the sums of money that would be lost, which my right hon. Friend would have protected.

This afternoon, I took down some of the Secretary of State's words with care. He said—this is in the context of an amendment on Report next week—that financial assistance may well be offered. To take the powers to offer financial assistance but not indicate the scale of it or the way in which it will be delivered will not help any of the sub-post offices. By the end of next week, we shall be in the same position.

The Minister must find a way of firming up that announcement so that it will bring comfort to sub-postmasters, who are thinking of getting out of the business. After all, the Government are proposing that quite substantial sums of public money should go to rural areas for rural diversification over the next few years. It does not make much sense to introduce subsidy schemes to encourage new small businesses when existing small businesses are being driven out through lack of financial or other support.

We know that the Government, in the case of Rover and BMW, are proposing that substantial sums should be made available to help the west midlands deal with the loss of jobs. The loss of jobs as a result of losing rural sub-post offices will be substantial as well.

The Minister needs to firm up the Government's position. He said in Westminster Hall this morning that the previous Government backed down in the early 1980s and 1990s on ACT proposals. I well recall those moments because I was then in government. There is sometimes a tension between the technological advances that we all want to see and the preservation of essential community services in rural areas. There is a balance to be struck. In the early 1980s and 1990s, we struck the balance in finding a way to protect essential local services in rural areas. At present, the Government have not done that, and I urge them to do so.

5.56 pm

Mr. David Borrow (South Ribble)

I shall keep my remarks brief, given the significant number of Members who wish to contribute to the debate which will soon come to an end.

I recognise that the problems of the sub-post office network are part and parcel of a pattern of difficulties that small businesses have had in communities both urban and rural over the past 30 years, whether they be butchers, greengrocers, ordinary grocers or small independent petrol filling stations. Many of these small businesses that operate to serve local communities have been hit by changes in shopping and retail patterns over the past 30 years.

The decline in the sub-post office network has taken place because in many areas people now shop and spend their money in a different way. That has led to a decline in small retail outlets in small communities, whether in urban or rural areas. That is part of the long-term pattern.

In the context of sub-post offices, we are facing the problem of the introduction of automated credit transfer. We know that ACT exists and that it has had an effect on sub-post offices over the past few years by eating away at their business of providing cash benefits across the counter. As the years pass and if we do nothing, more and more people will transfer to having benefits—pensions, child benefit or whatever—paid through ACT. The 40 per cent. of income that sub-post offices now receive through the operation of the benefits system will decline naturally as people transfer to ACT, irrespective of what the Government do.

The Government's problem was: "What do we do, if we leave the system as it is, to ensure that people continue to have benefits paid through the existing old-fashioned paper system. Do we try to stop people moving to ACT? Do we try to sustain the sub-post office network in that way? Do we recognise the change that is taking place and seek to build on it, and signal"—this is what the Government have done—"that during the two years from 2003–05 there will be a move across the board to ACT, while preserving the right for people to receive cash across the counter in sub-post offices? Can we use that as a trigger for discussions with sub-post offices on alternative revenue sources that can be introduced?" I very much welcome my right hon. Friend the Secretary of State's promise of subsidies where necessary to enable the businesses to be sustained into the future.

Sub-post offices are small private businesses, often run from their homes by married couples. The fact that the business plan beyond 2003–05 is not known creates uncertainty and undermines the resale value of those businesses. The Government have encountered a dilemma in attempting to move forward. Did they wait until every nut and bolt of the new system was in place, and until every question about new revenue sources could be answered, before they made an announcement about the transfer to ACT? If so, that could have looked like a fait accompli.

Alternatively, did the Government signal that, some time in the future, most benefit payments would be transferred gradually to ACT? In the interim, some payments would continue to be paid in cash through an automated system at post offices, but the majority would be paid into bank accounts through ACT. That interim period could provide an opportunity for discussion and consultation between the post office network and Government Departments on the development of alternative sources of income. I believe that the second option is the right way to proceed.

Mr. Letwin

Is not there a critical problem with that option? Given the complete lack of a plan, does not the hon. Gentleman agree that the period between now and 2003 is not sufficient? Should not sufficient time be allowed to put in place a proper plan, to ensure that people know that problems will be solved in time?

Mr. Borrow

I have made it clear in previous contributions in the Chamber on this matter that, as a matter of urgency, the Government must come up with the details of how the system will work after 2003. They have a responsibility to ensure that post office network representatives can work out business strategies for sub-postmasters and mistresses over the next few years.

Recently, I addressed the annual meeting of the Preston branch of the National Federation of Sub-Postmasters. About 60 or 70 people attended a lively meeting, at which it was clear that federation members were not averse to change. Change is part of small business, and many post offices have had to change over the past 20 or 30 years and develop new lines. However, problems arise out of uncertainty.

That uncertainty cannot go on indefinitely. If the nuts and bolts of the proposals cannot be put in place quickly, I urge my hon. Friend the Minister to consult his colleagues in the Department of Social Security and to re-examine the time scale of the transfer. I have always made it clear that I support the transfer principle, but I want to ensure that my constituents in Lancashire villages have a viable post office network through which they can get their benefits and so on.

If it takes a bit longer than 2003–05 to achieve that, then so be it—that would be a small price to pay to ensure that the network is retained. In the months ahead, we must focus not on keeping things as they are but on ensuring that a robust new model for the sub-post office network is introduced. That model must be capable of being sustained, not for three or four years but for 30 or 40.

6.4 pm

Mr. David Prior (North Norfolk)

I begin by thanking Keith Nicholls, who runs the post office in Stalham, and John and Christine Page, who run the office in Cromer, for coming to lobby me today. They appreciate the seriousness of the Government's proposals, even if the Government do not. They recognise that to lose 30 per cent. of their income, and possibly more, will damage the capital value of their businesses, put new entrants off going into the business, and lead to widespread closures of sub-post offices.

Many other people have written to me over the past two months. Many do not have bank accounts. Even when they have them, many want to take cash out every week and spend it in their local villages. In addition, many of them have a real understanding of and sympathy for those who live in the countryside.

A Miss Rowe from Gimingham in my constituency wrote to me to say that, over the past 35 years, her local village school has been closed, and the local shop. The local policeman no longer lives in the village, the resident priest has gone and the forge has closed. All that is left in that village—and in many others in Norfolk and elsewhere—is the post office. The post office is a vital hub of local services, especially in rural areas.

I want to draw three key facts to the Minister's attention. First, 2 million adults in this country, most of them pensioners, do not have bank accounts. If they live in the country, the frail, the elderly and those without access to transport often cannot get to a bank. Many of those pensioners are worried that they will not be able to get their weekly cash because their local post office will no longer be there. What choice do they have?

Secondly, 19 million people receive weekly cash benefits from local post offices. If they are forced to go elsewhere, much of the business that they currently conduct in their village, or locally, will go with them. As Mrs. Browning from the small village of Langham in my constituency put it: The weekly pension I collect gives the cash to pay the milkman, the coalman, and buy my paper and bread. If the Government's proposed changes are implemented, I will have to travel 12 miles to the nearest bank, which means I will spend less money in my local shop. The knock-on effects on the local economy of closing a sub-post office are very significant.

In the country above all, poor transport means that local post offices are crucial for local people. Online banking and travelling long distances are not options for many, especially for old people.

My third fact goes to the heart of the debate. Most sub-post offices receive at least 30 per cent. of their income from benefit and pension payments. The footfall effect in offices that are in shops or which provide other services may increase that to more than 50 per cent.

How will that income be replaced? Nothing that we have heard today gives me confidence that the Government have thought through the implications of having to replace as much as 50 per cent. of the income of a sub-post office. We have been offered only the Secretary of State's vision for the future. There have been no concrete proposals, and those who run sub-post offices cannot exist on his vision. They need to know where the income is to come from, and how much it will be.

Many sub-post offices operate on the bread line, and are run more for love than money. People run such offices because they want to contribute in a practical way to their local community.

Two sub-post offices in my constituency have closed in the past year, at Tunstead and Saxthorpe. There is a growing suspicion that the Government are closing sub-post offices by stealth. The magazine Saga stated: There is a time bomb currently ticking away in Britain's villages and towns. I am not sure that the Government fully understand that post offices are hugely important local community centres, where people can meet and chat. They are a vital part of local communities. It is no good giving people the right to choose automated bank transfers or weekly cash if there is no post office left from which to receive their weekly cash payments.

The uncertainty about the future caused by the Government's proposals for automated credit transfer is undermining the confidence of sub-post offices, destroying their capital values, putting off new entrants and accelerating their closure. That will have significant knock-on effects on local communities.

This project should be put on hold until the future viability of sub-post offices can be assured.

6.10 pm

Mr. Desmond Browne (Kilmarnock and Loudoun)

I cannot compete with the large number of sub-post offices that the right hon. Member for South Norfolk (Mr. MacGregor) has in his constituency. Nor can I compete with the years of experience of my hon. Friend the Member for Liverpool, West Derby (Mr. Wareing) and the hon. Member for West Dorset (Mr. Letwin), nor with the experience of the Post Office that my hon. Friend the Member for Morecambe and Lunesdale (Miss Smith) brought to this interesting debate. However, I can articulate some of the concerns of my constituents. I welcome the spirit of all-party good faith from the hon. Member for West Dorset. We must put aside recriminations and move forward together on an all-party basis to get the best for our network of sub-post offices. Many right hon. and hon. Members have spoken about sub-post offices in glowing terms this afternoon and we all support them, or else we would not be here.

Talking down the network is damaging it. I know that there are concerns about a crisis of confidence among sub-postmasters, and I accept that that means that people make business decisions in that climate. However, I see a crisis of confidence among the customers of sub-post offices. When I met my own delegation of sub-postmasters today—and I shall not resist the temptation of naming them at a suitable point in my speech—Mrs. Nan Haswell, who has been communicating with me about this issue for some months, told me that she can, in her small sub-post office in the village of Dunlop, collect council rents. One of her regular customers was issued with a new rent book this week. She said to Mrs. Haswell that as the sub-post office would not be there any more, she wrote to the council saying that she would pay her rent directly through the bank. That is the effect that the crisis, which is to some degree generated by deliberate campaigns to undermine the network for political purposes, is having in some areas on the network of post offices.

Millions of people are signing petitions to keep post offices open, and tens of thousands of them are at the same time signing bank forms to carry out transactions that could easily be done through the post office. They are using banks to receive benefits or pay for services. The irony of that is not lost on me, and I hope that it is not lost on Opposition Members.

My delegation consisted of Mrs. Haswell, Mr. Mohammed, who runs an urban post office in a housing scheme in Whatriggs road in the Bellfield area of Kilmarnock, and Mrs. Dunlop who is the sub-postmistress in the small village of Fenwick. Their message was that they do not want any favours, they just want a fair day's wage for a fair day's work. That seems a reasonable request from honest working people and I, as their Member of Parliament, feel duty-bound to help them achieve it.

The complications of this issue have already been mentioned and concern the nature of the businesses. I do not propose to repeat what other people have said, but I think that there is potentially an important and bright future for these businesses in providing community services. However, I believe that that future depends on a partnership between the businesses, the Post Office—which is sometimes all too separate from those businesses—the communities, local councils, community councils, parish councils, local enterprise companies, training and enterprise councils and other local businesses. We have to work together to generate that community spirit, and the view that the resources are important to the community life not only of small villages and rural areas but solid urban communities, which are sometimes small villages within urban settings. The post office provides an important hub for some of those communities.

That cannot happen unless we do several things, including breaking up the centralised approach of the Post Office to the way in which deals are done for post offices rather than by them. Post offices in my constituency are told by Cascade telephone calls that services that they previously provided can no longer be provided because the Post Office has concluded the contract. That happened in one case with Scottish Power. No one explains to sub-postmasters that this important aspect of their business and income stream will be lost—they are told by a Cascade telephone call. They were told in my constituency last week by such a call that they have lost the right to sell BT stamps because BT has moved on to plastic.

I make a plea for the Government to engage with the Post Office to devolve power to the post offices so that the network, which is not a homogeneous lump of rural post offices or two homogeneous lumps of rural and urban post offices but a number of individual businesses, can work with the local communities, councils and local enterprise companies to generate the local partnerships that are needed to provide services.

Another example of how centralisation has worked against the post offices in my constituency is Girobank' s recent insistence on a £1 charge for a transaction relating to the collection of council tax. The council has absorbed that cost for some time but can no longer and has had to tell people who pay their council tax that way that they will have to pay an extra £1 when they go to the post office. Sensibly, those people will not do it, because some of them are paying small sums such as £4 a week towards their council tax. Again, decisions are being made centrally that affect the income stream of individual businesses. There needs to be some flexibility.

My final point relates to the opportunity of post offices to take advantage of the current negotiations with the major banks to design and produce a bank account that can be operated at low or no cost, which will prevent people with small amounts of money from going into overdraft. It is important that the deal, which can, I understand, be done within weeks is properly funded by either the banks or the Government so that it can be put in place now. In that way, it can be ready for customers in time for the ACT changes. I understand from the managing director of retail services at the Post Office that that alone could generate £200 million of the £400 million income that the network receives from benefits payments.

In short, I do not believe that this valuable network of post offices should be made to depend on the payment of benefits or pensions in future. That is an unsustainable and unviable future. However, there are many opportunities out there. We must all co-operate to generate such opportunities, but we need considerable assistance from both the Government and the Post Office.

6.19 pm

Mr. Howard Flight (Arundel and South Downs)

I think that right hon. and hon. Members will agree that the debates this afternoon and in Westminster Hall this morning show that the Government are mishandling sub-post office policy. As my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) advised us, the Secretary of State will be getting his cards in the next day or two—some 18,000 of them—from sub-postmasters.

The Government will be extremely foolish if they go ahead with the policy as it stands. They are out of touch not just with sub-postmasters but with their own constituency, as has been made clear in the debate. Many of the Government's aspirations are common sense, and we agree with them, but they do not add up to a viable policy. It is probably correct to argue that post offices should not depend in the long term on income from delivering benefits. I am a great supporter of the idea that the commercial banking system should subcontract provision of services to sub-post offices, particularly in rural communities. Horizon offers new conduits of business for post offices in the booking of theatre tickets and travel and so forth. All those things provide good opportunities.

The problem is that adherence to the automated credit transfer timetable is likely to cause the loss of one third of our sub-post offices. There will not be enough of a network to take up the opportunities. The Government must adapt their policy to address that problem, and there are several options. They must either provide a public underwriting of subsidies sufficient to sustain the post office network, which would allow ACT to be operative by 2003, or ACT should be postponed, perhaps for seven years but certainly until new revenues from bank subcontracting and Horizon allow post offices to phase in the income reductions that will result from ACT. The Government could also re-examine the Conservative swipe programme arrangements.

It appears that, of the projected £400 million saving on ACT, £100 million is purely from technology advance. The realistic reduction in payment is around £300 million. The swipe card arrangement is a compromise that would marginally reduce income to sub-post offices from benefit administration, but would allow them enough income to remain viable.

It was inappropriate of Ministers to criticise commercial banks for closing branches when the banks have made arrangements with post offices to provide services. The Government's own timetable on ACT is certain to result in closure of one third of our sub-post offices, and they have not made any provision to guarantee support for those post offices. In other words, the Government are being less helpful to customers than the banks are. The banks have done what they feel they must do because of advanced technology, but they have considered the impact and made alternative arrangements. The Government merely say that they must do what they are doing because of the need for ACT, and they could not care less about the people who have invested their life savings in running sub-post offices or about the public at large. It is humbug to criticise the banking sector while doing what they are doing.

I hope that the Government have received the message. They will pay a big political price if they have not. The most logical choice is to delay ACT until alternative revenues have come through.

6.24 pm

Mr. Martin Salter (Reading, West)

I welcome the opportunity to take part in the debate as a supporter of a publicly owned post office network and a campaigner against the tide of financial exclusion that has engulfed many communities because of post office and bank closures. I also welcome it as a former deputy leader of Reading borough council, one of the few that installed a sub-post office in its civic offices and that was expanding postal services in its area.

Labour Members will not be impressed by the crocodile tears of some Conservative Members. Their party presided over an unprecedented decline in the post office network. Over the past 25 years, one fifth of the network closed down. We all remember, to our horror, that we had a Conservative Government for 18 of those years, and it was that Government, in 1983, who introduced ACT.

I am partly reassured by statements from Ministers, including my right hon. Friend the Secretary of State for Trade and Industry, that cash payments will be available after 2003. I welcome the announcement that a new clause will be inserted in the Postal Services Bill on Report to provide subsidy, and I welcome the £1 billion capital modernisation of the post office network. Even a luddite like me can see the value of equipping post offices with modern online information technology.

It would be nonsensical for the Post Office to continue to rely on purely paper transactions. However, it would also be nonsense to suggest that the future of the post office network should be predicated on huge benefit payments resulting from the kind of mass unemployment that happened under the Thatcher Government.

There is an urgent need to find new business to strengthen the Post Office and guarantee its future. Having been broadly supportive so far of the Government's approach, I want to sound a couple of warning notes. We have, to be honest, come to this matter rather late. Cash machines have their place, but I first came to the fight on bank closures in local communities because Lloyds TSB was installing cash machines instead of cashiers in banks in my constituency. What use are cash machines to someone who is blind or disabled? What use are they to a jobbing builder who needs more than £200 a day? Machines are welcome, but they have their limitations.

We need more than talk from Ministers, and from politicians of all hues, if we are to provide the vital new business of banking services in the post office network. Bank closures, which are engulfing many communities, present an opportunity to open up the post office network. Last Friday, Barclays shut 172 branches, leaving 84 communities without a bank, and that is the tip of the iceberg. We have seen 4,000 bank branch closures over the past 10 years. Deloitte and Touche Consulting Group anticipates a similar number of closures over the next few years—1,000 more communities will be bankless. Barclays's last-minute, face-saving deals with the Post Office are fooling no one.

We need measures to support small, district shopping centres in general because post offices face the same pressures as they do. A review of services currently available only at Crown post offices, but which could be available at sub-post offices, is also necessary, as is proper regulation of the banking industry. Access to redundant bank premises—or the capital receipts, where appropriate—would help post office modernisation and extension. A co-ordinated approach is needed by the UK banking sector, Post Office Counters and the Government to ensure that basic banking services are available the length and breadth of the land.

The Post Office is the best loved of all our public services. It belongs in the public sector. It is the fulcrum of community life. All we ask is that it should thrive and prosper in the 21st century. All that my constituents want is access to their own money. It is not too much to ask.

6.29 pm

Mr. Oliver Letwin (West Dorset)

This is the third time that I have spoken about this subject today, something that I have in common with other hon. Members present. I shall take just two or three minutes at most. I wish to make one practical point, which has become clearer and clearer during the day. It has not yet entered the official doctrine of the Minister and his colleagues.

It is now almost five years since the swipe card system was first proposed. I have no knowledge of what went wrong with the administration of that system in the later years of its implementation, but clearly something did. In those five years, there has been a technological revolution. The Minister will be as aware of it as any other hon. Member present. Among other things, the extension of asymmetric digital subscriber lines and the presence of internet technology and IT-based solutions make it almost inconceivable that there should not now be available a simple and cheap variant of the swipe card arrangement, with or without cards, which would enable sub-post offices, with or without direct connection to the Horizon project and perhaps personal computer-based instead, to deliver cheaply and effectively the benefits and pensions that the Department of Social Security wishes to deliver at about the same cost as was originally envisaged.

I suspect that the way in which the DSS has traditionally gone about business precludes an approach that would work. However, the Minister is not at the DSS but the Department of Trade and Industry. He has the chance, through the Post Office, to adopt a modern solution that uses the technological revolution. The costs of installing remote computer networks have fallen not by half or a quarter but by perhaps 90 per cent. in the past five years. Whatever it would have cost then, it must be vastly less now.

I apologise for repeating the cri de coeur, but if the Minister will just give himself a little more time, personally take charge through the Post Office and remove from the hands of the DSS the means of implementing the changes on a cheap, cost-effective basis, we can get over the problem. We can find a way through that will preserve our networks and a system that enables people who are vulnerable and not particularly sophisticated to collect their benefits over the counter in existing sub-post offices throughout our land. Everyone will then be very happy and I promise the Minister that I meant what I said this morning in Westminster Hall. I will be the first to construct a statue to his memory if he manages that.

6.32 pm

Mr. Alan Duncan (Rutland and Melton)

This is an important day for the future of the post office network, because hundreds, if not thousands, of people have travelled to the House to put their case. That was not stage acted: in the fine tradition of democratic lobbying, it was an endeavour with a serious point and purpose. Those people were not just representing themselves—a fact to which the three million signatures on a petition handed in this morning readily attest. I congratulate all of them and hope that they have travelled safely from far and wide.

We have initiated this debate, not for the first time, because we have been leading on this issue and we shall continue to press the Government for the answers that they refuse to give. It is high time that they listened hard and answered in detail. Perhaps the starting point for that should be the debate, which I commend to hon. Members on both sides of the House as compulsory reading, initiated by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) in the Westminster Hall annexe this morning. My right hon. Friend spoke in detail and with devastating effect.

The Government's policy simply does not add up. They say that they want to protect the post office network, but they intend to rob it of its income. They then speak with certainty only of issues irrelevant to the problem that they are causing. We will not let them get away with that.

We have had a lively debate, and many hon. Members have brought their experience to bear. The hon. Member for Liverpool, West Derby (Mr. Wareing), even though he spoke from the Government Benches, was spot on. He essentially said, "No income, no post offices," and explained that that would hit the poorest hardest. Many of his constituents will be very hard hit by the Government's policy.

My right hon. Friend the Member for East Devon (Sir P. Emery) was rightly worried about post office closures in his constituency. Indeed, there have been more than 500 up and down the country since the general election. Let me be honest about the earlier figures. In the 18 years preceding the general election, there were 2,568 post office closures. Let us put that figure on the table. It is not 3,000, as the Prime Minister said from the Dispatch Box this afternoon. I doubt whether he will come back to the House and correct the figure. I am afraid that, if he did that on each occasion, it would become too habitual a duty.

The call is for the Government to be more practical. I think the hon. Member for Morecambe and Lunesdale (Miss Smith) must be a deeply confused person. She says that post offices do not want subsidies. She is right. They want incomes. She was unable to explain to the House where those incomes would come from.

Miss Geraldine Smith

Will the hon. Gentleman give way?

Mr. Duncan

In a second. The established income risks disappearing—

Miss Smith

Will the hon. Gentleman give way?

Mr. Duncan

If the hon. Lady will only listen, I have already said that I would give way. Post offices' established income risks disappearing before any new income appears on the scene.

Miss Smith

I have made it clear where the income will come from. We need new business for the Post Office, including banking facilities. I mentioned the words "a people's bank". It is no good doing as the Conservative party would and relying on benefits work. That would leave post offices to wither on the vine. The Government are trying to do something about it.

Mr. Duncan

The hon. Lady—like many of her Government's Ministers—has to realise that wishful thinking does not constitute a properly delivered public policy. Although she may have an idea that there should be a new income flow, until the Minister can describe the detailed way in which it will happen, her wishful thinking will count for nothing.

My right hon. Friend the Member for South Norfolk (Mr. MacGregor) said it all. I sympathise with him in choosing not to name all his sub-post offices. I, too, have more than 100 villages in my constituency of Rutland and Melton and many of them face a dire predicament. As my right hon. Friend says, the trickle of closures is becoming a flood and the anticipation of problems in the future is causing a big problem now. The income of post offices does not stand to be replaced by credible alternatives, and we need to know that it will be.

I hope that the House will forgive me if I do not rehearse all the arguments put by other hon. Members, including the hon. Members for South Ribble (Mr. Borrow) and for Reading, West (Mr. Salter) and my hon. Friends the Members for Arundel and South Downs (Mr. Flight), for North Norfolk (Mr. Prior) and for West Dorset (Mr. Letwin). I would like to get to the kernel of the debate. Let us dismiss all the irrelevances that have crept in. Of course automatic teller machines will change the pattern of some cash collection, but they are not a solution and there are problems for people who do not want to receive their money in units of £10 or who simply cannot, and who need every single penny to which they are entitled. Indeed, there is the problem of charges. The Government may put 75p on the pension, but if £1.50 disappears in ATM charges, that ain't much of a solution either.

Privatisation is also a red herring. This is not a debate about ownership. It is a debate about the income that will accrue to those institutions that are already in private hands and will determine whether they are able to survive. It is a question not of ownership but of income. Only parliamentary discipline stops me expressing quite how irrelevant I feel privatisation has become to the debate.

Dr. George Turner

Will the hon. Gentleman give way?

Mr. Duncan

I hope that the hon. Gentleman will forgive me, but I must press on.

Let us concentrate on the one crucial issue to which we need answers from the Minister this evening—the income that individual sub-post offices will either continue to enjoy or be denied. This is all about income. If the Minister gives us decent answers on that issue alone, we will be satisfied with his response. It is the crux of the matter. Under the policy that the Minister is gradually implementing, the vast post office network—roughly 19,000 or more post offices—may suffer a loss of income of between 40 and 60 per cent. In practical terms, the Government are replacing a guaranteed Government-sourced income, as my right hon. Friend the Member for South Norfolk said, with an uncertain, commercially negotiated income. Not only will that income be uncertain but it will be one of which the Government intend to wash their hands.

As the Minister's letter to every hon. Member said: The amount that subpostmasters will receive will depend on the contracts that the Post Office Groups strike with banks and on negotiations between the group and the NFSP. These are commercial matters and it would not be appropriate for the Government to become involved.

However, it would be appropriate for the Government to tell the House and—more important—all those who have risked their money and dedicated their lives to the preservation of a widespread Post Office network what that income will be. Where will it come from? How will those people be able to continue in business? In the present climate, they do not need a crystal ball to work out that they face a certain reduction in their income, with no certain plans for its replacement.

The Secretary of State refused point blank to answer questions on that detail. It is shameful that, whenever the right hon. Gentleman is asked a question, he obfuscates and diverts the argument to something that is wholly irrelevant—privatisation or the fact that people can withdraw cash, in full, without deduction. That is good—as far as it goes. However, if, when a person withdraws 100 per cent. of their entitlement, the agent or intermediary who is providing the service that delivers that money receives the square root of diddly-squat in return, there will not be a Post Office network through which to deliver 100 per cent. of benefits. The Minister smiles. He always enjoys my use of language—we had "scragging" in Committee; now we have "diddly-squat".

If the Post Office network does not have an income that is sufficient to maintain its commercial viability, there will be no network. The only issue that matters is what the income for the Post Office network will be following the implementation of the Government's policy. The Minister does not need to divert the argument; he does not need to talk about anything else.

Let me summarise the matter for the Minister's benefit, so that he will be under no illusions. We know that the Secretary of State has not had a good month. With his failure to answer our questions on this issue, things are getting even worse for him. I have a few specific questions for the Minister. What will be the income of the sub-post offices—be they in urban areas or in rural areas, such as those that many of my right hon. and hon. Friends represent? How will that future income compare with that which they currently enjoy? Much of their present income is derived from a Government source, of which the Minister has control. It does not derive from a commercially negotiated arrangement over which they have less control and which is bound to produce a lower amount. What will be the components of their future income? In the new Labour world, how will the Post Office network income be made up?

To follow up my question to the Secretary of State—who replied, in effect, "Don't worry, they will all have a reasonable income"—what is a reasonable income? How much lower will a sub-post office's income have to be before the Secretary of State, in all his wisdom, would consider it unreasonable? What income does the Minister think is required to sustain a Post Office network of roughly the same size as the present one? How will the new arrangements be sufficient to replace the income that he is taking away from the network?

Given the activities carried out by post offices, and the services they deliver, does the Minister agree that income is much better than subsidy? I suspect that, in order to atone for much of what the Government know will happen, they will try to slew the arrangements away from income towards subsidy—I think that will come into next Tuesday's Report stage of the Postal Services Bill. They know full well that, if that is done, subsidy will wither on the vine in due course—away the network will go. If there is no income, there will be no post office: no income—no network. We need to know what the income of sub-post offices will be in new Labour's future world, when their policy is implemented. We want detail on that point.

Tomorrow is the Secretary of State's birthday. My hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) said that 18,000 birthday wishes are winging their way towards him—even as I stand here. I hope that he will give proper answers to all those 18,000 hard-working people. In the meantime, it would indeed be appropriate if the Secretary of State got his cards.

6.45 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson)

This is the second debate on this issue today; the first was in Westminster Hall this morning, when I heard several constructive contributions. During this afternoon's debate, we were asked—at least twice—to read the Hansard report of the speech made this morning by the right hon. Member for Hitchin and Harpenden (Mr. Lilley). I commended the work of the right hon. Gentleman. I also pointed out that he was a politician of ability and effectiveness—that is obviously why he no longer sits on the Opposition Front Bench.

Furthermore, I noted that the right hon. Gentleman understood the arguments on this matter because the NFSP had held two previous, well-attended rallies at the House. As a member of the Communication Workers Union, I worked shoulder to shoulder with the NFSP on the Post Office Users National Council, so I know that the federation is a very effective organisation.

Those rallies were held in the early 1980s and the early 1990s; both were about ACT—as was the rally today. As this is an Opposition day debate, and as the hon. Member for Tiverton and Honiton (Mrs. Browning) referred to the history of the Conservative party on this matter, we shall make the same point this afternoon that we made throughout this morning's debate: the Conservatives introduced ACT, for the first time, in the early 1980s.

The NFSP held a rally at which its members made several demands. First, they said, "No ACT." Secondly, on the back of the Rayner report—commissioned by the then Conservative Government—they said that pensions should not be paid fortnightly. Thirdly, they said that child benefit should not be paid monthly, but should continue to be paid weekly. The rally was most effective. The Government rejected the federation's arguments on ACT and on monthly payment of child benefit and went ahead with ACT.

The next rally was held in the early 1990s—when the right hon. Member for Hitchin and Harpenden held office—over the extension of ACT. Not only did the previous Government introduce ACT—they extended it in the early 1990s to cover benefits such as those for unemployment and disability. The federation argued against extending ACT and the right hon. Gentleman advanced many arguments—recorded in Hansard—in its favour.

The right hon. Gentleman argued that ACT was an especially effective and secure form of payment. He argued: People are increasingly accustomed to receiving payment into their bank accounts: 70 per cent. of claimants have bank accounts, and many find payment into their accounts more convenient and safer.—[Official Report, 19 May 1993; Vol. 225, c. 259.] He advanced further arguments on the benefits of ACT.

As a result of that NFSP rally—in which I took part—the right hon. Gentleman introduced the well-intentioned benefit payment card. We can forget all the Conservative hype and all their poor attempts at political point-scoring. "Why did the benefit payment card scheme collapse? Why cannot we return to it?" was a question put by the Leader of the Opposition at Prime Minister's questions this afternoon.

We tried hard to continue that system. The most instructive information available on the matter is in a report from the Select Committee on Trade and Industry, which pointed out that, since 1 May 1997, the Labour Government had probably tried too hard to rescue the system—to pull the fat out of the fire. However, the Committee was extremely critical of that disastrous PFI—it was a turkey of a PIF. The Trade and Industry Committee made four points, on which we are still awaiting a report by the National Audit Office to the Public Accounts Committee.

However, the essential facts are as follows. The benefit payment card collapsed. We had to rescue the computerisation of the Post Office, and we have taken that forward. As a result, 5,000 post offices are already computerised, and by spring 2001 the whole network will be online under the Horizon system.

Mr. David Davis (Haltemprice and Howden)

Will the Minister give way?

Mr. Johnson

I will give way in a second.

It is important that we should know, in this debate, where the Opposition stand on this issue; after all, it is an Opposition day debate. They need to tell us what they would plan to do. Would they have continued with a benefit payment card project that was three years behind, vastly overspent and heading for disaster? We have been told time and again that the issue of privatisation is irrelevant to the debate.

Mr. Clifton-Brown

rose—

Mr. Johnson

The issue of privatisation is extremely relevant, for the following reason. Conservative Members are still committed not only to privatising the Post Office but to breaking it up. As every sub-postmaster and sub-postmistress in the country knows, anyone who proposes ripping the Post Office Counters network away from the rest of the Post Office must be two foils short of an order book, because the Post Office depends on the Royal Mail for 24 per cent. of its income. Parcels returned to mail order companies create a major part of its income. Therefore, breaking up the Post Office is an essential feature of Conservative policy.

I give way to the hon. Member—I am sorry; the right hon. Member—for Haltemprice and Howden (Mr. Davis).

Mr. Davis

The hon. Gentleman is right that the National Audit Office report will appear in front of my Committee in due course, but it will be some time before it does so. Will he undertake today to place in the Library immediately all the documentation relating to the costing, which we have heard amounts to hundreds of millions of pounds, of this PFI—I imagine that he meant PFI, not PIF, when he was speaking earlier—so that the whole House can be aware of the basis of this £100 million overcost now instead of, perhaps, in nine months' time, when my Committee considers it?

Mr. Johnson

I do apologise to the right hon. Gentleman. As I understand it, the National Audit Office has access to papers that the Trade and Industry Committee was entitled to see on a confidential basis, and that means that that report is extremely important.

The Opposition still labour under the misapprehension—this is crucial to the point made by the hon. Member for Rutland and Melton (Mr. Duncan)—that the Post Office Counters network is in the private sector. It is not. For the absence of doubt, let me explain to Opposition Members that sub-postmasters and sub-postmistresses have sunk £1 billion of their own money in in total, as private business people, subcontracting to a publicly owned organisation, driven from the centre in terms of policy, and actually driving forward a system where there is already cross-subsidy, so that the sub-postmasters and sub-postmistresses are not in control of the arrangements for subsidising post offices, or for cross-subsidising post offices, which is an essential element of keeping half the network open.

Mrs. Browning

The hon. Gentleman is aware that twice in previous debates I have asked the Secretary of State for Trade and Industry whether, in turning the Post Office into a publicly owned plc, he would guarantee that the Government, if they continued in office, would never sell shares in that plc. Will the hon. Gentleman now continue that debate by guaranteeing to the House that that will never happen?

Mr. Johnson

The hon. Lady knows full well that we have made it quite clear on the face of the Postal Services Bill that any move to privatise the Post Office by any future Government would need primary legislation, which would have to pass through the House.

Mrs. Browning

Guarantee.

Mr. Johnson

We are looking for a public sector solution. The problem with the Conservative party is that it was driven by dogma; it could not see any solution other than privatisation. It was for those reasons that the Conservatives suggested breaking up the Post Office.

Mr. Duncan

Will the Minister give way?

Mr. Johnson

I will give way one more time.

Mr. Duncan

Given the time, may I respectfully ask the Minister now to answer the questions that I asked him about the kernel of the debate—questions about the future shape of the income?

Mr. Johnson

The hon. Gentleman thinks that he has struck the kernel of the debate. I consider that the hon. Member for West Dorset (Mr. Letwin) and other Conservative Members did so. I think that, if anyone did, it was the hon. Member for South Devon—[HON. MEMBERS: "East Devon."] I apologise. I believe that the right hon. Member for East Devon (Sir P. Emery), and Labour Members, struck the core of the debate.

The core of the debate is the question, "How do we modernise the Post Office, equip it for the 21st century, attract new work into the business and then ensure a successful future for the post office network?" We shall not solve this problem—and the previous Government would not have solved it—by using the benefit payment card, which was a swipe card. It was an interim measure. The Post Office had said that it wanted to move on to smartcard technology. The contract was for only eight years, concluding in 2005, and there is every evidence that whichever Government were in power would be moving to ACT following that eight-year contract.

There was a problem in the early 1980s, and there was a rally in the 1990s, when sub-postmasters and sub-postmistresses had to come to the House because of the problems that ACT was causing. We shall not solve this issue until we find a way forward that both ensures that there is a proper future for the Post Office in a modernised, computerised network and resolves the dilemma about how we can cause people to visit post offices to collect their benefits and pensions in an automated network.

Mr. Clifton-Brown

Will the hon. Gentleman give way?

Mr. Johnson

No; I am not giving way any more.

We are not saying that ATMs are the answer to the problem that has been suggested by Conservative Members. However, we are saying that, in a network of 18,500 post offices, the fact that 3,000 ATMs are now being installed where there were fewer than 200, will be a great help to the rural economy. We are not suggesting that we move to ACT, then look to modernise the network and then look to attract new work. We say that the first step, by 2001, is to computerise the network, the second step is to attract new work and the third step is to move to ACT.

We have had a very important opportunity today to debate the real issues that face the future of sub-postmasters throughout the country. An argument was made about the income of sub-postmasters and sub-postmistresses. One of the aspects of the Post Office's being a publicly owned service is that, every year, there is a negotiation between the National Federation of Sub-Postmasters and the Post Office to determine the unit payment per transaction. The hon. Member for Rutland and Melton left out the part of my letter in which I pointed out that, currently, the figure negotiated with the banks was 17p. There is no reason whatever why that should change under the arrangements that we are proposing.

Furthermore, about 10,000 post offices do not depend on the transactions at all; they receive a minimum floor payment as part of a publicly owned Post Office's commitment to keeping post offices in rural areas. That does not depend on income.

The future lies in the Horizon project, and in the performance and innovation unit study. We have been criticised because the PIU has taken four months to produce a report; the previous Government were reviewing the Post Office between 1992 and 1997 and still did not come up with a response, and it cost £1.6 million of taxpayers' money.

The PIU report meets some of the points made by Members on both sides of the House, in that it will look across Government at ways in which we can utilise an under-utilised network, promote an under-promoted network and find new ways to attract people to come into the Post Office that do not depend on the constant battle against ACT, to which people are moving in increasing numbers, year by year. We can bring back network banking to rural areas. We can provide a modern Government service through local post offices. The very fact that the move to ACT is taking place in 2003–05 has galvanised the Post Office, the Government and everyone else into action, to see how we can bring new work into the Post Office. At the end of that, we guarantee that any benefit recipient or pensioner who wants to receive the payments in cash, in full across a post office counter and weekly—as my right hon. Friend the Prime Minister reminded us this afternoon—will continue to be able to do so. That is the future for the Post Office network.

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

The House divided Ayes 139, Noes 364

Division No. 163]	[7 pm
AYES
Ainsworth, Peter (E Surrey)	Gale, Roger
Amess, David	Garnier, Edward
Ancram, Rt Hon Michael	Gibb, Nick
Artuthnot, Rt Hon James	Gill, Christopher
Atkinson, David (Bour'mth E)	Gillan, Mrs Cheryl
Atkinson, Peter (Hexham)	Gorman, Mrs Teresa
Baldry, Tony	Gray, James
Beggs, Roy	Green, Damian
Bercow, John	Greenway, John
Body, Sir Richard	Grieve, Dominic
Boswell, Tim	Gummer, Rt Hon John
Bottomley, Peter (Worthing W)	Hague, Rt Hon William
Bottomley, Rt Hon Mrs Virginia	Hamilton, Rt Hon Sir Archie
Brazier, Julian	Hammond, Philip
Brooke, Rt Hon Peter	Hawkins, Nick
Browning, Mrs Angela	Heald, Oliver
Butterfill, John	Heathcoat-Amory, Rt Hon David
Cash, William	Hogg, Rt Hon Douglas
Chapman, Sir Sydney (Chipping Barnet)	Horam, John
	Howard, Rt Hon Michael
Clappison, James	Howarth, Gerald (Aldershot)
Clarke, Rt Hon Kenneth (Rushcliffe)	Hunter, Andrew
	Jack, Rt Hon Michael
Clifton-Brown, Geoffrey	Jackson, Robert (Wantage)
Collins, Tim	Jenkin, Bernard
Cormack, Sir Patrick	Johnson Smith,
Cran, James	Rt Hon Sir Geoffrey
Davies, Quentin (Grantham)	King, Rt Hon Tom (Bridgwater)
Davis, Rt Hon David (Haltemprice)	Kirkbride, Miss Julie
Day, Stephen	Lait, Mrs Jacqui
Duncan, Alan	Lansley, Andrew
Duncan Smith, Iain	Leigh, Edward
Emery, Rt Hon Sir Peter	Letwin, Oliver
Evans, Nigel	Lewis, Dr Julian (New Forest E)
Faber, David	Lidington, David
Fabricant, Michael	Lilley, Rt Hon Peter
Fallon, Michael	Lloyd, Rt Hon Sir Peter (Fareham)
Flight, Howard	Loughton, Tim
Forsythe, Clifford	Luff, Peter
Forth, Rt Hon Eric	Lyell, Rt Hon Sir Nicholas
Fox, Dr Liam	MacGregor, Rt Hon John
Fraser, Christopher	McIntosh, Miss Anne

MacKay, Rt Hon Andrew	Spicer, Sir Michael
Maclean, Rt Hon David	Spring, Richard
McLoughlin, Patrick	Stanley, Rt Hon Sir John
Madel, Sir David	Steen, Anthony
Malins, Humfrey	Streeter, Gary
Maples, John	Swayne, Desmond
Maude, Rt Hon Francis	Syms, Robert
May, Mrs Theresa	Tapsell, Sir Peter
Moss, Malcolm	Taylor, Ian (Esher & Walton)
Nicholls, Patrick	Taylor, Rt Hon John D (Strangford)
Norman, Archie	Taylor, John M (Solihull)
O'Brien, Stephen (Eddisbury)	Townend, John
Page, Richard	Tredinnick, David
Paice, James	Trend, Michael
Paterson, Owen	Tyrie, Andrew
Pickles, Eric	Walter, Robert
Portillo, Rt Hon Michael	Waterson, Nigel
Prior Dravid	Whitney, Sir Raymond
Randall, John	Whittingdale, John Widdecombe, Rt Hon Miss Ann
Redwood, Rt Hon John	Wilkinson, John
Robathan, Andrew	Willetts, David
Robertson, Laurence	Wilshire, David
Roe, Mrs Marion (Broxbourne)	Winterton, Mrs Ann (Congleton)
Ruffley, David	Winterton, Nicholas (Macclesfield)
St Aubyn, Nick	Yeo, Tim
Sayeed, Jonathan	Young, Rt Hon Sir George
Shephard, Rt Hon Mrs Gillian
Shepherd, Richard	Tellers for the Ayes:
Soames, Nicholas	Mrs. Eleanor Laing and
Spelman, Mrs Caroline	Mr. Keith Simpson.

NOES
Abbott, Ms Diane	Bruce, Malcolm (Gordon)
Ainger, Nick	Buck, Ms Karen
Ainsworth, Robert (Cov'try NE)	Burden. Richard
Alexander, Douglas	Burgon, Colin
Allan, Richard	Burnett, John
Allen, Graham	Burstow, Paul
Anderson, Donald (Swansea E)	Butler, Mrs Christine
Anderson, Janet (Rossendale)	Byers, Rt Hon Stephen
Ashdown, Rt Hon Paddy	Cable, Dr Vincent
Ashton, Joe	Caborn, Rt Hon Richard
Atherton, Ms Candy	Campbell, Alan (Tynemouth)
Atkins, Charlotte	Campbell, Mrs Anne (C'bridge)
Austin, John	Campbell, Rt Hon Menzies (NE Fife)
Ballard, Jackie
Banks, Tony	Campbell, Ronnie (Blyth V)
Barnes, Harry	Campbell-Savours, Dale
Barron, Kevin	Cann, Jamie
Battle, John	Caplin, Ivor
Beard, Nigel	Casale, Roger
Beckett, Rt Hon Mrs Margaret	Caton, Martin
Begg, Miss Anne	Cawsey, Ian
Beith, Rt Hon A J	Chapman, Ben (Wirral S)
Bell, Martin (Tatton)	Chaytor, David
Bell, Stuart (Middlesbrough)	Chisholm, Malcolm
Benn, Hilary (Leeds C)	Clapham, Michael
Benn, Rt Hon Tony (Chesterfield)	Clark, Rt Hon Dr David (S Shields)
Bennett, Andrew F	Clark, Dr Lynda (Edinburgh Pentlands)
Benton, Joe
Bermingham, Gerald	Clark, Paul (Gillingham)
Berry, Roger	Clarke, Tony (Northampton S)
Blackman, Liz	Clelland, David
Blair, Rt Hon Tony	Coaker, Vernon
Blears, Ms Hazel	Coffey, Ms Ann
Blunkett, Rt Hon David	Cohen, Harry
Borrow, David	Coleman, Iain
Bradley, Peter (The Wrekin)	Colman, Tony
Bradshaw, Ben	Connarty, Michael
Brake, Tom	Cooper, Yvette
Brand, Dr Peter	Corbett, Robin
Breed, Colin	Cotter, Brian
Brinton, Mrs Helen	Cousins, Jim
Brown, Rt Hon Nick (Newcastle E)	Cox, Tom
Brown, Russell (Dumfries)	Crausby, David
Browne, Desmond	Cryer, Mrs Ann (Keighley)

Cryer, John (Hornchurch)	Hughes, Kevin (Doncaster N)
Cummings, John	Hughes, Simon (Southwatk N)
Cunningham, Rt Hon Dr Jack (Copeland)	Humble, Mrs Joan
	Hurst, Alan
Curtis-Thomas, Mrs Claire	Iddon, Dr Brian
Dalyell, Tam	Illsley, Eric
Darling, Rt Hon Alistair	Ingram, Rt Hon Adam
Darvill, Keith	Jackson, Ms Glenda (Hampsteaa
Davey, Edward (Kingston)	Jamieson, David
Davey, Valerie (Bristol W)	Jenkins, Brian
Davidson, Ian	Johnson, Alan (Hull W & Hessle)
Davies, Rt Hon Denzil (Llanelli)	Johnson, Miss Melanie (Welwyn Hatfield)
Davies, Geraint (Croydon C)
Davis, Rt Hon Terry (B'ham Hodge H)	Jones, Rt Hon Barry (Alyn)
	Jones, Helen (Warrington N)
Dean, Mrs Janet	Jones, Ms Jenny (Wolverh'ton SW)
Denham, John
Dobbin, Jim	Jones, Jon Owen (Cardiff C)
Donohoe, Brian H	Jones, Dr Lynne (Selly Oak)
Doran, Frank	Jones, Martyn (Clwyd S)
Dowd, Jim	Jowell, Rt Hon Ms Tessa
Drew, David	Kaufman, Rt Hon Gerald
Dunwoody, Mrs Gwyneth	Keeble, Ms Sally
Edwards, Huw	Keen, Alan (Feltham & Heston)
Ellman, Mrs Louise	Kemp, Fraser
Ennis, Jeff	Kennedy, Jane (Wavertree)
Etherington, Bill	Khabra, Piara S
Fearn, Ronnie	Kidney, David
Field, Rt Hon Frank	Kilfoyle, Peter
Flint, Caroline	King, Andy (Rugby & Kenilworth)
Flynn, Paul	Kirkwood, Archy
Follett, Barbara	Kumar, Dr Ashok
Foster, Rt Hon Derek	Ladyman, Dr Stephen
Foster, Don (Bath)	Lawrence, Mrs Jackie
Foster, Michael Jabez (Hastings)	Laxton, Bob
Foster, Michael J (Worcester)	Lepper, David
Fyfe, Maria	Leslie, Christopher
Galloway, George	Levitt, Tom
Gapes, Mike	Lewis, Ivan (Bury S)
Gardiner, Barry	Lewis, Terry (Worsley)
George, Andrew (St Ives)	Liddell, Rt Hon Mrs Helen
Gerrard, Neil	Linton, Martin
Gibson, Dr Ian	Livsey, Richard
Gilroy, Mrs Linda	Lloyd, Tony (Manchester C)
Godman, Dr Norman A	LJwyd, Elfyn
Godsiff, Roger	Lock, David
Goggins, Paul	Love, Andrew
Golding, Mrs Llin	McAllion, John
Griffiths, Nigel (Edinburgh S)	McAvoy, Thomas
Griffiths, Win (Bridgend)	McCabe, Steve
Grocott, Bruce	McCafferty, Ms Chris
Grogan, John	McCartney, Rt Hon Ian (Makerfield)
Gunnell, John
Hall, Mike (Weaver Vale)	McDonagh, Siobhain
Hall, Patrick (Bedford)	McDonnell, John
Hancock, Mike	McFall, John
Hanson, David	McGuire, Mrs Anne
Harman, Rt Hon Ms Harriet	McIsaac, Shona
Harris, Dr Evan	McKenna, Mrs Rosemary
Harvey, Nick	Mackinlay, Andrew
Heal, Mrs Sylvia	Maclennan, Rt Hon Robert
Healey, John	McNamara, Kevin
Heath, David (Somerton & Frome)	McNulty, Tony
Henderson, Doug (Newcastle N)	MacShane, Denis
Henderson, Ivan (Harwich)	Mactaggart, Fiona
Hepburn, Stephen	McWalter, Tony
Heppell, John	McWilliam, John
Hewitt, Ms Patricia	Mahon, Mrs Alice
Hinchliffe, David	Mallaber, Judy
Hoey, Kate	Marsden, Gordon (Blackpool S)
Hood, Jimmy	Marsden, Paul (Shrewsbury)
Hope, Phil	Marshall, David (Shettleston)
Hopkins, Kelvin	Marshall, Jim (Leicester S)
Howarth, George (Knowsley N)	Marshall-Andrews, Robert
Hoyle, Lindsay	Martlew, Eric
Hughes, Ms Beverley (Stretford)	Maxton, John

Meacher, Rt Hon Michael	Short, Rt Hon Clare
Meale, Alan	Simpson, Alan (Nottingham S)
Michie, Bill (Shef'ld Heeley)	Singh, Marsha
Miller, Andrew	Skinner, Dennis
Mitchell, Austin	Smith, Rt Hon Andrew (Oxford E)
Moffatt, Laura	Smith, Rt Hon Chris (Islington S)
Moonie, Dr Lewis	Smith, Miss Geraldine (Morecambe & Lunesdale)
Moore, Michael
Moran, Ms Margaret	Smith, Jacqui (Redditch)
Morgan, Ms Julie (Cardiff N)	Smith, John (Glamorgan)
Morris, Rt Hon Ms Estelle (B'ham Yardley)	Smith, Llew (Blaenau Gwent)
	Smith, Sir Robert (WAb'd'ns)
Morris, Rt Hon Sir John (Aberavon)	Snape, Peter
	Spellar, John
Mountford, Kali	Squire, Ms Rachel
Mullin, Chris	Starkey, Dr Phyllis
Murphy, Denis (Wansbeck)	Stevenson, George
Murphy, Rt Hon Paul (Torfaen)	Stewart, David (Inverness E)
Naysmith, Dr Doug	Stinchcombe, Paul
Norris, Dan	Strang, Rt Hon Dr Gavin
O'Brien, Mike (N Warks)	Straw, Rt Hon Jack
O'Hara, Eddie	Stringer, Graham
Olner, Bill	Stuart, Ms Gisela
O'Neill, Martin	Stunell, Andrew
Organ, Mrs Diana	Taylor, Rt Hon Mrs Ann (Dewsbury)
Osborne, Ms Sandra
Palmer, Dr Nick	Taylor, David (NW Leics)
Pearson, Ian	Taylor, Matthew (Truro)
Pendry, Tom	Temple-Morris, Peter
Perham, Ms Linda	Thomas, Gareth (Clwyd W)
Pickthall, Colin	Thomas, Gareth R (Harrow W)
Pike, Peter L	Thomas, Simon (Ceredigion)
Plaskitt, James	Timms, Stephen
Pollard, Kerry	Tipping, Paddy
Pond, Chris	Tonge, Dr Jenny
Pound, Stephen	Touhig, Don
Powell, Sir Raymond	Turner, Dennis (Wolverh'ton SE)
Prentice, Ms Bridget (Lewisham E)	Turner, Dr Desmond (Kemptown)
Prentice, Gordon (Pendle)	Turner, Dr George (NW Norfolk)
Prescott, Rt Hon John	Turner, Neil (Wigan)
Primarolo, Dawno	Twigg, Derek (Halton)
Purchase, Ken	Twigg, Stephen (Enfield)
Quin, Rt Hon Ms Joyce	Tyler, Paul
Radice, Rt Hon Giles	Vis, Dr Rudi
Rapson, Syd	Wallace, James
Reed, Andrew (Loughborough)	Walley, Ms Joan
Reid, Rt Hon Dr John (Hamilton N)	Wareing, Robert N
Rendel, David	Watts, David
Robinson, Geoffrey (CoV'try NW)	Webb, Steveo,
Roche, Mrs Barbara	White, Brian
Rogers, Allan	Whitehead, Dr Alan
Rooker, Rt Hon Jeff	Wicks, Malcolm
Rooney, Terry	Williams, Rt Hon Alan (Swansea W)
Ross, Ernie (Dundee W)
Rowlands, Ted	Williams, Alan W (E Carmarthen)
Roy, Frank	Williams, Mrs Betty (Conwy)
Ruane, Chris	Wilson, Brian
Ruddock, Joan	Winnick, David
Russell, Bob (Colchester)	Winterton, Ms Rosie (Doncaster C)
Russell, Ms Christine (Chester)	Wood, Mike
Ryan, Ms Joan	Woodward, Shaun
Salter, Martin	Woolas, Phil
Sanders, Adrian	Worthington, Tony
Sarwar, Mohammad	Wray, James
Savidge, Malcolm	Wright, Dr Tony (Cannock)
Sawford, Phil	Wyatt, Derek
Shaw, Jonathan
Sheerman, Barry	Tellers for the Noes:
Sheldon, Rt Hon Robert	Mr. Greg Pope and
Shipley, Ms Debra	Mr. Clive Betts.

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 310, Noes 167.

Division No. 164]	[7.14pm
AYES
Abbott, Ms Diane	Darling, Rt Hon Alistair
Ainger, Nick	Darvill, Keith
Ainsworth, Robert (Cov'try NE)	Davey, Valerie (Bristol W)
Alexander, Douglas	Davidson, Ian
Allen, Graham	Davies, Rt Hon Denzil (Llanelli)
Anderson, Janet (Rossendale)	Davies, Geraint (Croydon C)
Ashton, Joe	Davis, Rt Hon Terry (B'ham Hodge H)
Atherton, Ms Candy
Atkins, Charlotte	Dean, Mrs Janet
Austin, John	Denham, John
Banks, Tony	Dobbin, Jim
Barnes, Harry	Donohoe, Brian H
Battle, John	Doran, Frank
Beard, Nigel	Dowd, Jim
Beckett, Rt Hon Mrs Margaret	Drew, David
Begg, Miss Anne	Edwards, Huw
Bell, Stuart (Middlesbrough)	Ellman, Mrs Louise
Benn, Hilary (Leeds C)	Ennis, Jeff
Benn, Rt Hon Tony (Chesterfield)	Etherington, Bill
Bennett, Andrew F	Field, Rt Hon Frank
Benton, Joe	Flint, Caroline
Bermingham, Gerald	Flynn, Paul
Berry, Roger	Foster, Rt Hon Derek
Blackman, Liz	Foster, Michael Jabez (Hastings)
Blears, Ms Hazel	Foster, Michael J (Worcester)
Boateng, Rt Hon Paul	Fyfe, Maria
Borrow, David	Galloway, George
Bradley, Peter (The Wrekin)	Gapes, Mike
Bradshaw, Ben	Gardiner, Barry
Brinton, Mrs Helen	Gerrard, Neil
Brown, Rt Hon Nick (Newcastle E)	Gibson, Dr Ian
Brown, Russell (Dumfries)	Gilroy, Mrs Linda
Browne, Desmond	Godman, Dr Norman A
Buck, Ms Karen	Godsiff, Roger
Burden, Richard	Goggins, Paul
Burgon, Colin	Golding, Mrs Llin
Butler, Mrs Christine	Griffiths, Nigel (Edinburgh S)
Byers, Rt Hon Stephen	Griffiths, Win (Bridgend)
Caborn, Rt Hon Richard	Grocott, Bruce
Campbell, Alan (Tynemouth)	Grogan, John
Campbell, Mrs Anne (C'bridge)	Gunnell, John
Campbell, Ronnie (Blyth V)	Hall, Mike (Weaver Vale)
Campbell-Savours, Dale	Hall, Patrick (Bedford)
Cann, Jamie	Hanson, David
Caplin, Ivor	Harman, Rt Hon Ms Harriet
Casale, Roger	Heal, Mrs Sylvia
Caton, Martin	Healey, John
Cawsey, Ian	Henderson, Doug (Newcastle N)
Chapman, Ben (WirralS)	Henderson, Ivan (Harwich)
Clapham, Michael	Hepburn, Stephen
Clark, Rt Hon Dr David (S Shields)	Heppell, John
Clark, Dr Lynda (Edinburgh Pentlands)	Hewitt, Ms Patricia
	Hinchliffe, David
Clark, Paul (Gillingham)	Hood, Jimmy
Clarke, Tony (Northampton S)	Hope, Phil
Clelland, David	Hopkins, Kelvin
Coaker, Vernon	Howarth, George (Knowsley N)
Coffey, Ms Ann	Hoyle, Lindsay
Cohen, Harry	Hughes, Ms Beverley (Stretford)
Coleman, Iain	Hughes, Kevin (Doncaster N)
Colman, Tony	Humble, Mrs Joan
Connarty, Michael	Hurst, Alan
Cooper, Yvette	Iddon, Dr Brian
Corbett, Robin	Illsley, Eric
Cousins, Jim	Ingram, Rt Hon Adam
Cox, Tom	Jackson, Ms Glenda (Hampstead)
Crausby, David	Jamieson, David
Cryer, Mrs Ann (Keighley)	Jenkins, Brian
Cryer, John (Hornchurch)	Johnson, Alan (Hull W & Hessle)
Cummings, John	Johnson, Miss Melanie (Welwyn Hatfield)
Curtis-Thomas, Mrs Claire

Jones, Rt Hon Barry (Alyn)	Naysmith, Dr Doug
Jones, Helen (Warrington N)	Norris, Dan
Jones, Ms Jenny (Wolverh'ton SW)	O'Brien, Mike (N Warks)
	O'Hara, Eddie
Jones, Jon Owen (Cardiff C)	Olner, Bill
Jones, Dr Lynne (Selly Oak)	Organ, Mrs Diana
Jones, Martyn (Clwyd S)	Osborne, Ms Sandra
Jowell, Fit Hon Ms Tessa	Palmer, Dr Nick
Kaufman, Rt Hon Gerald	Pearson, Ian
Keeble, Ms Sally	Pendry, Tom
Keen, Alan (Feltham & Heston)	Perham, Ms Linda
Kemp, Fraser	Pickthall, Colin
Kennedy, Jane (Wavertree)	Pike, Peter L
Khabra, Piara S	Plaskitt, James
Kidney, David	Pollard, Kerry
Kilfoyle, Peter	Pond, Chris
King, Andy (Rugby & Kenilworth)	Pound, Stephen
Kumar, Dr Ashok	Powell, Sir Raymond
Ladyman, Dr Stephen	Prentice, Ms Bridget (Lewisham E)
Lawrence, Mrs Jackie	Prentice, Gordon (Pendle)
Laxton, Bob	Prescott, Rt Hon John
Lepper, David	Primarolo, Dawn
Leslie, Christopher	Purchase, Ken
Levitt, Tom	Quin, Rt Hon Ms Joyce
Lewis, Ivan (Bury S)	Radice, Rt Hon Giles
Lewis, Terry (Worsley)	Rapson, Syd
Liddell, Rt Hon Mrs Helen	Reed, Andrew (Loughborough)
Linton, Martin	Reid, Rt Hon Dr John (Hamilton N)
Lloyd, Tony (Manchester C)	Robinson, Geoffrey (Cov'try NW)
Lock, David	Roche, Mrs Barbara
Love, Andrew	Rogers, Allan
McAllion, John	Rooker, Rt Hon Jeff
McAvoy, Thomas	Rooney, Terry
McCabe, Steve	Ross, Ernie (Dundee W)
McCafferty, Ms Chris	Rowlands, Ted
McCartney, Rt Hon Ian (Makerfield)	Roy, Frank
	Ruane, Chris
McDonagh, Siobhain	Ruddock, Joan
McDonnell, John	Russell, Ms Christine (Chester)
McFall, John	Ryan, Ms Joan
McGuire, Mrs Anne	Salter, Martin
McIsaac, Shona	Sarwar, Mohammad
McKenna, Mrs Rosemary	Savidge, Malcolm
Mackinlay, Andrew	Sawford, Phil
McNamara, Kevin	Shaw, Jonathan
McNulty, Tony	Sheerman, Barry
MacShane, Denis	Shipley, Ms Debra
Mactaggart, Fiona	Short, Rt Hon Clare
McWalter, Tony	Simpson, Alan (Nottingham S)
McWilliam, John	Singh, Marsha
Mahon, Mrs Alice	Skinner, Dennis
Mallaber, Judy	Smith, Rt Hon Andrew (Oxford E)
Marsden, Gordon (Blackpool S)	Smith, Rt Hon Chris (Islington S)
Marsden, Paul (Shrewsbury)	Smith, Miss Geraldine (Morecambe & Lunesdale)
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)	Smith, Jacqui (Redditch)
Marshall-Andrews, Robert	Smith, John (Glamorgan)
Martlew, Eric	Smith, Llew (Blaenau Gwent)
Maxton, John	Snape, Peter
Meacher, Rt Hon Michael	Spellar, John
Meale, Alan	Squire, Ms Rachel
Michie, Bill (Shef'ld Heeley)	Starkey, Dr Phyllis
Miller, Andrew	Stewart, David (Inverness E)
Mitchell, Austin	Stinchcombe, Paul
Moffatt, Laura	Strang, Rt Hon Dr Gavin
Moonie, Dr Lewis	Straw, Rt Hon Jack
Moran, Ms Margaret	Stringer, Graham
Morgan, Ms Julie (Cardiff N)	Stuart, Ms Gisela
Morris, Rt Hon Ms Estelle (B'ham Yardley)	Taylor, Rt Hon Mrs Ann (Dewsbury)
Morris, Rt Hon Sir John (Aberavon)	Taylor, David (NWLeks)
	Temple-Morris, Peter
Mountford, Kali	Thomas, Gareth (Clwyd W)
Mullin, Chris	Thomas, Gareth R (Harrow W)
Murphy, Denis (Wansbeck)	Timms, Stephen
Murphy, Rt Hon Paul (Torfaen)	Tipping, Paddy

Touhig, Don	Williams, Alan W (E Carmarthen)
Turner, Dennis (Wolverh'ton SE)	Williams, Mrs Betty (Conwy)
Turner, Dr Desmond (Kemptown)	Winnick, David
Turner, Dr George (NW Norfolk)	Winterton, Ms Rosie (Doncaster C)
Turner, Neil (Wigan)	Wood, Mike
Twigg, Derek (Halton)	Woodward, Shaun
Twigg, Stephen (Enfield)	Woolas, Phil
Vis, Dr Rudi	Worthington, Tony
Walley, Ms Joan	Wray, James
Wareing, Robert N	Wright, Dr Tony (Cannock)
Watts, David	Wyatt, Derek
White, Brian
Whitehead, Dr Alan	Tellers for the Ayes:
Williams, Rt Hon Alan (Swansea W)	Mr. Clive Betts and
	Mr. Greg Pope.
NOES
Ainsworth, Peter (E Surrey)	Garnier, Edward
Allan, Richard	George, Andrew (St Ives)
Amess, David	Gibb, Nick
Ancram, Rt Hon Michael	Gill, Christopher
Arbuthnot, Rt Hon James	Gillan, Mrs Cheryl
Ashdown, Rt Hon Paddy	Gorman, Mrs Teresa
Atkinson, David (Bour'mth E)	Gray, James
Atkinson, Peter (Hexham)	Green, Damian
Baldry, Tony	Greenway, John
Ballard, Jackie	Grieve, Dominic
Beggs, Roy	Gummer, Rt Hon John
Beith, Rt Hon A J	Hamilton, Rt Hon Sir Archie
Bell, Martin (Tatton)	Hammond, Philip
Bercow, John	Hancock, Mike
Body, Sir Richard	Harris, Dr Evan
Boswell, Tim	Harvey, Nick
Bottomley, Peter (Worthing W)	Hawkins, Nick
Bottomley, Rt Hon Mrs Virginia	Heald, Oliver
Brake, Tom	Heath, David (Somerton & Frome)
Brand, Dr Peter	Hogg, Rt Hon Douglas
Brazier, Julian	Horam, John
Breed, Colin	Howard, Rt Hon Michael
Browning, Mrs Angela	Howarth, Gerald (Aldershot)
Bruce, Malcolm (Gordon)	Hughes, Simon (Southwark N)
Burnett, John	Hunter, Andrew
Burstow, Paul	Jack, Rt Hon Michael
Butterfill, John	Jackson, Robert (Wantage)
Cable, Dr Vincent	Jenkin, Bernard
Campbell, Rt Hon Menzies (NE Fife)	Johnson Smith,
	Rt Hon Sir Geoffrey
Cash, William	Key, Robert
Chapman, Sir Sydney (Chipping Barnet)	King, Rt Hon Tom (Bridgwater)
	Kirkbride, Miss Julie
Clappison, James	Kirkwood, Archy
Clarke, Rt Hon Kenneth (Rushcliffe)	Lait, Mrs Jacqui
	Lansley, Andrew
Clifton-Brown, Geoffrey	Leigh, Edward
Collins, Tim	Letwin, Oliver
Cormack, Sir Patrick	Lewis, Dr Julian (New Forest E)
Cotter, Brian	Lidington, David
Cran, James	Livsey, Richard
Davey, Edward (Kingston)	Lloyd, Rt Hon Sir Peter (Fareham)
Davies, Quentin (Grantham)	Llwyd, Elfyn
Davis, Rt Hon David (Haltemprice)	Loughton, Tim
Day, Stephen	Luff, Peter
Duncan, Alan	Lyell, Rt Hon Sir Nicholas
Duncan Smith, Iain	MacGregor, Rt Hon John
Emery, Rt Hon Sir Peter	McIntosh, Miss Anne
Evans, Nigel	MacKay, Rt Hon Andrew
Fabricant, Michael	Maclean, Rt Hon David
Fallon, Michael	Madennan, Rt Hon Robert
Fearn, Ronnie	McLoughlin, Patrick
Flight, Howard	Malins, Humfrey
Forsythe, Clifford	Maples, John
Forth, Rt Hon Eric	Maude, Rt Hon Francis
Foster, Don (Bath)	May, Mrs Theresa
Fox, Dr Liam	Moore, Michael
Fraser, Christopher	Moss, Malcolm
Gale, Roger	Nicholls, Patrick

Norman, Archie	Tapsell, Sir Peter
O'Brien, Stephen (Eddisbury)	Taylor, Ian (Esher S Walton)
Page, Richard	Taylor, Rt Hon John D (Strangford)
Paice, James	Taylor, John M (Solihull)
Paterson, Owen	Taylor, Matthew (Truro)
Pickles, Eric	Thomas, Simon (Ceredigion)
Prior, David	Tonge, Dr Jenny
Randall, John	Townend, John
Redwood, Rt Hon John	Tredinnick, David
Rendel, David	Trend, Michael
Robertson, Laurence	Tyler, Paul
Roe, Mrs Marion (Broxbourne)	Tyrie, Andrew
Russell, Bob (Colchester)	Wallace, James
St Aubyn, Nick	Walter, Robert
Sanders, Adrian	Waterson, Nigel
Sayeed, Jonathan	Webb, Steve
Shepherd, Richard	Whittingdale, John
Smith, Sir Robert (WAb'd'ns)	Whitney, Sir Raymond
	Widdecombe, Rt Hon Miss Ann
Soames, Nicholas	Wilkinson, John
Spelman, Mrs Caroline	Willetts, David
Spicer, Sir Michael	Wilshire, David
Spring, Richard	Winterton, Mrs Ann (Congleton)
Stanley, Rt Hon Sir John	Winterton, Nicholas (Macclesfield)
Steen, Anthony	Young, Rt Hon Sir George
Streeter, Gary
Stunell, Andrew	Tellers for the Noes:
Swayne, Desmond	Mrs. Eleanor Laing and
Syms, Robert	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 fact that the Government is committed to a national post office network and is taking steps to secure this; welcomes the Government's moves to plan the introduction of automated credit transfer; welcomes the Postal Services Bill which will enable the Post Office to modernise, so building up new business for the network; welcomes the investment of £500 million to ensure the network is computerised, so enabling a successful and modern network to emerge; welcomes the Government's introduction for the first time of criteria for access to Post Office services; welcomes the commitment to give benefit recipients the choice of having benefits paid in cash via a post office even after the switch to automated credit transfer is complete in 2005; and applauds the work of the sub-postmasters and postmistresses and condemns those who make their lives harder by talking down the network.