HC Deb 13 July 2000 vol 353 cc1049-52
4. Mr. Nick St. Aubyn (Guildford)

What recent representations he has received regarding the future of the Post Office. [128943]

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

We have received a number of representations, including from the Post Office, which said that, at long last, it was to be given the commercial freedoms necessary for a world-class company; and also from the National Federation of Sub-Postmasters, which welcomed the Government's recent statements on the post office network.

Mr. St. Aubyn

I am surprised that the Secretary of State did not mention that I, too, have sent him representations, including a petition from the Women's Institute in Onslow village, and the Women's Institute in Bramley village, castigating the way in which the Government have bungled the whole issue. As the Minister for Competitiveness failed to answer the question asked by my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley), perhaps the Secretary of State can have a go at it. Commercial banks are profit-making institutions, whereas the universal bank will be a loss-making institution. In the negotiations between the Post Office and the commercial banks, who will be making the profits, and who will be making the losses?

Mr. Byers

For the record, I give the House the response that came from the Women's Institute after our statement had been made to the House. The petitions that were gathered by the Women's Institute were conducted before we made the statement in response to the PIU report. In response to our statement, the Women's Institute said that it congratulated the Government on commissioning the PIU report and on not only agreeing to implement its recommendations in full, but promising to back that up with funding. We shall do that.

Mr. Peter Lilley (Hitchin and Harpenden)

How much?

Mr. Byers

Next Tuesday, when we have the spending review, the right hon. Gentleman will know how much we are committing to the post office network. That commitment will stand in stark contrast to Conservative Members' new commitment to cut £16 billion from the amounts that we shall be announcing next week. Their promise would not only entail public service cuts of £24 million for every constituency in the country, but means that they would not be able to deliver the funding that the post office network needs and that we are prepared to commit to it.

Charlotte Atkins (Staffordshire, Moorlands)

Will the profits from that enterprise go to rural areas such as Werrington and Ipstones in my constituency, which have never before enjoyed those types of facilities and services?

Mr. Byers

The renaissance that we are offering the post office network will enable many of those communities to have services and to expand services. The PIU report identified some very important services that post offices will be able to provide as a result of the extra resources that are being made available. Our approach stands in stark contrast to that adopted by the previous Government, who neglected the rural network of post offices. We are giving a clear commitment to 10,000 post offices. We have extended the definition of a rural community to ensure that there will be no avoidable closures of those post offices.

Dr. Vincent Cable (Twickenham)

Is it not the case that the Post Office is in considerable financial difficulty—not only because of the £570-million hit on the Horizon project, but because of the loss of £450 million annually in automated credit transfer income; the loss of £100 million in bond income; the £900 million, I believe, hole in the pension fund; and, now, the threat from the European Union directive to 15 per cent. of its sales? Against that background, how will the Post Office be able to maintain its universal service obligation and its obligation to the network while not increasing charges or abandoning the second-class post?

Mr. Byers

The hon. Gentleman will know that when we have the Postal Services Bill on the statute book, greater commercial freedom will be given to the Post Office to address those concerns. Our position has been quite different from that of Conservative Members, who basically had two approaches to the Post Office—to privatise it or to use it in the public sector to subsidise the Treasury. That was the reality of the previous Conservative Government's approach to the Post Office.

Our approach is different: to give the Post Office the commercial freedom that it needs. We are reducing the dividend paid to the Treasury, which means an extra £100 million to £150 million a year in extra income to the Post Office. We are putting £500 million into the Horizon project and next Tuesday we will announce a sum of money to support the post office network. All those steps will ensure that the Post Office and the network have a strong and vibrant future.

Mr. Barry Jones (Alyn and Deeside)

Does my right hon. Friend know that the Minister for Competitiveness visited some nine post offices in my constituency, meeting some 12 postmasters and postmistresses, and was very well received? One of those post offices was at Llanfynydd, a small, isolated village at 800 ft. Does he think that Llanfynydd post office will be ring-fenced and have a good future under his proposals?

Mr. Byers

If I could pronounce it, I am sure that it could—[Interruption.] My mother is Welsh, so I have to be very careful about these matters. I am sure that even at 800 ft that post office will have a strong and vibrant future because of the measures that we are introducing through the PIU report and also because of the strong advocacy from my right hon. Friend if there were any threat to the future of that particular post office.

Mr. Nicholas Soames (Mid-Sussex)

Would the right hon. Gentleman explain this to me please? Section 7.5 of the Government's document, "The Counter Revolution", which deals with financial services, says that the new banking system could not raise more than a maximum of £50 million. Where will the other £350 million come from to sustain the rural post office network?

Mr. Byers

That was in the PIU report that the Government accepted. The Post Office projected something like £150 million from the universal bank. However, the hon. Gentleman should be aware that that is not the only source of additional funding that the PIU report identified. There is a total package of measures to do with internet access, Government general practitioner services, support for urban post offices in deprived areas and support for the rural network. We are introducing a raft of measures to which the Conservative Government, who were in office for 18 years, did not give a thought. That shows that the people in rural communities have a clear choice for the post office network: decline, neglect and closures under the Tories or vision, commitment and a future under Labour.