§ Motion made, and Question proposed, That this House do now adjourn.—[Derek Twigg.]
10.17 pm§ Mr. Paul Burstow (Sutton and Cheam)I am grateful for the opportunity to raise the subject of the future of post offices in my constituency and in the borough of Sutton. I hope that, in this brief debate, my hon. Friend the Member for Carshalton and Wallington (Tom Brake), will catch your eye, Mr. Deputy Speaker, and have the opportunity to make one or two points about post offices in his constituency.
When I last raised the issue in an Adjournment debate just over two and a half years ago, the threat hanging over the sub-post office network in my constituency was just that—a threat. Today, the threat is turning into a reality. Post offices are closing in my constituency. The closures are piecemeal and cloaked in secrecy. My constituents have been left with the strong impression that the Post Office is paying lip service to consultation and just going through the motions when it comes to closing post offices.
During my previous Adjournment debate on the matter, I pointed out that, based on parliamentary answers, the local impact of
the switch from pension book to credit transfer will mean that at least one in three of the 16 sub-post offices in my constituency will be under threat, because more than 40 per cent. of their business comes from work for the Benefits Agency."—[Official Report, 5 June 2000; Vol. 351, c. 134.]Five sub-post offices are therefore at risk of closure in the borough of Sutton in my constituency. Since the previous debate on the subject, two sub-post offices have closed and the future of another is in question. Yet another is due for the chop through a formal consultation process.Let me outline what has happened in the past year. On 23 July, Mr. Drew McBride of the Post Office national consultation team wrote to tell me of the plan to close the Collingwood road sub-post office in my constituency. Residents and I had until 23 August to respond. I hope that the Minister agrees that consulting over the summer, when many people are on holiday and elsewhere, is poor practice. It denies people the opportunity to have their say. In his letter, Mr. McBride pointed out that there were three post offices in a half a mile radius of the Collingwood road branch: Sutton post office in the St. Nicholas centre; Oldfields road post office on the Sutton bypass, and the Grove road post office.
It is as if Mr. McBride and his team did no more than draw a circle on a map. He did not bother to factor in simple facts, such as half a mile up a hill being different from the same distance on the flat. Getting to the Grove road post office necessitates such a climb. He also neglected to consider the fact that one of the alternative post offices was on the other side of a busy dual carriageway. Despite the short notice of the consultation and the holiday period, more than 100 people signed the petition calling for the Collingwood road branch to remain open. The residents received the all-party backing of the local authority.
Insult was added to injury when the closing date for consultation was set at 23 August. Mr. McBride wrote on 30 August to tell me that the closure would go ahead 134 on 23 September. The closure appears to have been pre-planned, pre-programmed and pre-determined. It took Mr. McBride only seven days to weigh up and reject the representations of the local community, the council and me.
The closure programme progresses. On 24 February, Mr. McBride wrote to tell me about the proposed closure of the Oldfields road post office. However, six months ago, he wrote:
Of course, customers have a choice as to the Post Office branch they wish to use in the future. However, I believe that the nearest, most convenient branches are located at High Street, Sutton and Oldfields Road.Words fail me. The Post Office offers the prospect of a specific post office only to snatch it away from constituents.Such behaviour prompts the question, "Which post office will close next?" It is time for the Post Office to be much more open and honest about its plans. Will the Minister supply a list of the post offices that are earmarked for closure in the borough of Sutton so that we can scrutinise the process more carefully?
I hope that the Minister will undertake to ensure that the Post Office consultation team apologises to the community around the former Collingwood road post office for misleading it about the possibility of using the Oldfields road post office. People had it for only six months. In his letter, Mr. McBride points out that the nearest post offices are Sutton post office in the St. Nicholas centre, which is 7.7 miles away from the Oldfields road branch, and Gander Green lane post office, which is 0.4 miles away.
The Post Office is supposed to ensure that 95 per cent. of its customers live within half a mile of the nearest post office. That is no longer the case for many residents in Collingwood road or on the Cheam Park Farm estate. The piecemeal closures will result in growing gaps in the network. The elderly, the disabled and families who rely on post office services will suffer. Simply drawing circles on maps, with no local knowledge, will not benefit people.
Will the Minister ensure a proper mechanism to take account of the local factors that I have outlined? One driver for closures is loss of business due to plans for electronic transfer of benefits and pensions into bank accounts. The thrust of the information campaign surrounding the change downplays the option of the Post Office card accounts.
The implementation of such accounts is even more worrying. It appears as if they have been set up to fail. Why will not the trials of the new computer system finish until five days before the system is due to go live? Where is the margin for error? What are the contingency arrangements if the IT fails? If it works, will customers be able to use it?
During the Christmas Adjournment debate, I raised several anxieties about the Post Office card account on behalf of my local Age Concern. In a letter to Postwatch, Marion Harper, the chief officer of Sutton Age Concern, wrote:
We are very concerned about the entire concept of changes to pension collection, but we would welcome an explanation as to how the new system will affect older people with mobility problems, particularly arthritis, and older people who are visually impaired or blind.135 Postwatch's reply was very disturbing. Despite pressing the Department for Work and Pensions for an answer, it remained unclear how collections of benefits or pensions would happen where a person did not have a regular carer or helper and was taken ill suddenly. Giving out the PIN would be considered a breach of the terms and conditions of their account, so they will go without their pension.How will that problem be dealt with? When I asked Pensions Agency staff that question during a recent meeting of the Sutton Seniors Forum, they were unable to offer an answer. Can the Minister tell us tonight how people who become ill will be able to access their pension using a card account? When I raised those matters in the Christmas Adjournment debate, I was told that I would receive a response in writing from the Ministers who are responsible. To date, I have not received that response and I hope that we can obtain some answers tonight or get something in writing as soon as possible.
Local post offices play a vital role in our community. They are one of the building blocks of our economic vitality and shopping centres. On the basis of my experience of the closure programme in my area so far, I have no confidence whatever that the Post Office is really listening to the concerns of local authorities, residents or MPs in its consultation. I hope that the Minister will take that on board and make a change in that process for the future.
§ Tom Brake (Carshalton and Wallington)I should like to thank my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) for giving me the opportunity to speak in this debate.
Post offices are a lifeline in many rural communities, but their value to urban and suburban communities should not be underestimated either. When it seemed that Roundshaw post office was going to close, local people, many of whom do not have access to a car, were distraught. Fortunately, that particular battle has been won, as a very sensible solution was arrived at involving the post office sharing space with a new supermarket.
I am glad that we won that battle, but what alarms me is that there are other battles to be fought regarding future local post office closures and we do not know where the enemy lines are or what the rules of engagement are. We hear rumours that a particular post office may be under threat of closure, but as the Post Office is not forthcoming with its planned programme of closures, such rumours cannot be disproved or confirmed.
That is why I shall ask the Minister just one thing—to guarantee that there will be no more post office closures in the borough until a meaningful consultation process is put in place that will allow residents to put their case in a meaningful way. That is the guarantee that my constituents and those of my hon. Friend are seeking and that I hope that the Minister can deliver.
§ The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms)I congratulate the hon. Member for Sutton and Cheam (Mr. Burstow) on securing this 136 debate. I know that he is assiduous in his attention to issues that are relevant to elderly people in particular, and I welcome the opportunity to respond to the points that he and his hon. Friend the Member for Carshalton and Wallington (Tom Brake) have made during this short debate.
Both hon. Members set out the concerns of their constituents about proposals in their area. The hon. Member for Sutton and Cheam referred to the proposed closure of Oldfields road post office. That proposal is indeed part of the Post Office's programme for restructuring the urban post office network. I understand, however, that the proposal for that particular office has been suspended to enable Post Office Ltd. to recheck some of the data relating to it. Once that has been done, it is envisaged that the consultation will start again from scratch. It is helpful that I can point to that fact, which makes it clear that, contrary to what he said, the process is not on tram lines, but is being taken forward very carefully and in a very thoughtful way in order to ensure that the integrity of the post office network, and access to it in every part of the country, are maintained.
§ Mr. BurstowOn the notification of the suspension of the consultation process, can the Minister indicate when the decision was made?
§ Mr. TimmsI am afraid that I do not know exactly when the decision was made. I understand that the data on the closure that have been published and put into the public domain were correct and accurate, but that some of the information supplied to Postwatch was not. The Post Office took the view that it should do the right thing, check the data and then go right back to the start of the consultation process, which helpfully, from my point of view, demonstrates that the process will be fair and proper, as it should be.
The rationalisation and modernisation of the urban network is part of the process of maintaining a viable nationwide network of post offices. We need to go through that process if we are to maintain a good level of accessibility in every part of the country and provide a wider range of better quality services to post office customers, as we must. Both hon. Members complained about the proposed closures, but they did not suggest alternative closures. For the reasons that I am about to set out, it is essential to reduce the number of post offices.
It was a key recommendation of the performance and innovation unit's report about the future of the post office network, which was broadly supported by Liberal Democrat Members, that if the Post Office decided that fewer offices were needed in some urban areas, the Government should consider providing financial assistance to the Post Office to ensure that the sub-postmasters affected could be adequately compensated for the loss of value of their business.
Last November, following parliamentary approval of the funding, Post Office Ltd. initiated its programme. I should emphasise that the development of closure proposals, the consultation process and subsequent decisions on closure are operational matters for Post Office Ltd. rather than for the Government. However, it is important that the process be undertaken properly and thoughtfully, and, in particular, that the consultation should be well managed.
137 It is important to understand why the post office network in urban areas needs restructuring and why its income has declined. The reasons go back over 20 years. Past under-investment is certainly one factor, but greater mobility and changes in shopping and financial habits have also sharply reduced customer numbers. Of course the Post Office is not alone in having had to deal with such changes; other networks, such as those of the retail banks, have been scaled back as well. Post office networks in other countries have been through similar changes; for example, I understand that in Germany, to achieve consistent profitability, the number of post office branches was reduced from 30,000, a much higher number than in the UK, to 13,000, significantly lower than the current UK number. Many other countries have embarked on a similar process.
Some factors have had a particularly big impact in the UK. Post office income here has been heavily dependent on benefit payments, but over 42 per cent. of benefit recipients now access their benefit payments via bank accounts, compared with only 26 per cent. in 1996. That substantial reduction results from people changing the way in which they want to keep their money.
If we compare the 2001–02 financial year with that of five years previously, we find that the number of retirement pensions and widows benefits paid by order books and giros had dropped by more than 1 million, from just over 6 million to fewer than 5 million, even though the total number of pension recipients went up by more than 1 million. Child benefit payments made in that way dropped from just under 5 million to fewer than 4 million. Payments of incapacity benefit at post offices fell even more dramatically, from more than 2.5 million to fewer than 1 million. All that was the result of decisions made by benefit recipients.
§ Mr. BurstowWill the Minister consider the principal concern that my hon. Friend and I have put to him tonight—the piecemeal nature of the process that we have seen in our borough so far, which means that we are unable to see the totality of the plans and therefore to comment on them intelligently on behalf of our constituents? The plans proposed closing the Collingwood road branch and cited Oldfields road as being available, but now that is closing as well.
§ Mr. TimmsI shall certainly address that issue. It is important, however, that I set out for the House why the process is necessary, and, indeed, in the interests of our communities and of the post office network.
The number of people receiving their benefits at the post office has sharply fallen. The total number of people receiving jobseeker's allowance has fallen, which is good news, but that has reduced post office income. Girobank transactions at post offices fell by 37 per cent. between March 1997 and March 2002. National Savings transactions fell by 24 per cent., telephone bill payments by 25 per cent. and postal orders by 13 per cent. Those reductions have been only modestly offset by increases in the number of transactions for motor vehicle licences, lottery sales and bureau de change services.
The consequence is that in the constituency of the hon. Member for Sutton and Cheam and many urban areas throughout the country, there is now too little business for the number of post offices. The Post Office 138 has the biggest retail network of any organisation in Europe, with 50 per cent. more branches than all the UK banks put together. More than 1,000 of the 9,000 urban sub-post offices have at least 10 other post offices within a mile. The volume of business through the network is simply no longer sufficient to support so dense a network.
The Post Office programme is intended to restore the urban network to commercial viability, which all of us want to achieve. It aims to restore the confidence of the sub-postmasters, making it possible to attract much needed new investment. Earlier this evening, with my right hon. Friend the Deputy Prime Minister, I met a deputation from the National Federation of Sub-Postmasters. The federation has recognised and made it clear that
There is an urgent need for re-structuring … Tough decisions must be made in order to ensure a viable network for the future to create bigger, better and brighter post offices.I agree.The programme relates only to the urban network. Our commitment to ending avoidable closures in the rural network remains, and in the last quarter of last year the net closure figure for rural offices nationally was nil—the first time that anyone can remember there not being a reduction in numbers. However, Post Office officials will progressively visit every urban area to make a careful study of the configuration of the offices and of local factors such as public transport availability, demographics and geography in order to decide whether a particular office that the postmaster wishes to close can be allowed to do so.
§ Tom BrakeTo what degree does the Minister think elected Members, councillors and the local community should be involved in the formulation of those decisions?
§ Mr. TimmsI will come to that precise point, if the hon. Gentleman bears with me. It is a requirement of the process that the Post Office has established that all the parties he mentions be consulted—indeed, Members of Parliament will be written to at the start of the consultation process. It is important that that takes place.
Initially, the programme is to focus primarily on smaller urban offices where sub-postmasters are under the greatest pressure. Many sub-postmasters want to close their business and receive fair compensation, as the package offers. That is our starting point. I am almost certain that in the constituency cases that the hon. Gentlemen highlighted, the starting point of the process has been that the postmasters have wanted to close their office.
The Government will meet the costs of compensation to a total of £180 million over the next three years. We are providing a furl her £30 million for modernising and adapting the offices that remain. The key to improving standards in the remaining offices will be the increased volume of business that they can expect, but the grants of up to £10,000 for each office expecting to take on a significant number of additional customers—which must be matched by the same sum from the postmaster—will also provide an important boost. This is the first time that the Government have undertaken a 139 programme of investment in urban sub-post offices. The measure is additional to the PIU report recommendations, which in general were warmly welcomed.
As part of the package, the Post Office will generally require the receiving offices to improve their facilities and extend their opening hours. To an increasing extent, we will be able to expect sub-post offices to maintain the same hours as the associated retail businesses, and to improve their service to customers. Thus the quality of service that people can expect from their local post office will be improved.
The properly managed programme on which the Post Office has embarked is far preferable to the alternative of unmanaged closures resulting from falling income, which would cause much greater disruption to customers. At the end of the programme, more than 95 per cent. of people living in urban areas will still be within a mile of a post office. I think that the hon. Member for Sutton and Cheam mentioned half a mile, but one mile is the measurement used—and the majority will still be within half a mile.
The hon. Gentleman has talked about the other post offices close to Oldfields road. The programme that is being taken forward will follow the code of practice agreed between Consignia and the consumer watchdog, Postwatch. For every proposed closure, merger or relocation, there will be an independent consultation process lasting at least a calendar month, which will be extended to allow for Bank holidays. The consultation will be conducted by Post Office Ltd., but will closely involve Postwatch. To pick up the point made by the hon. Member for Carshalton and Wallington (Mr. Brake), I can add that it will include the local Member of Parliament, who will be written to at the beginning of the process. To ensure that the needs of all customers, including the elderly, disabled people, those on low incomes and others, have been properly considered, Post Office Ltd. will, in developing its proposals, take account of factors such as accessibility, viability of the remaining post offices, transport links—where the bus stops are—opening hours and numbers of counter positions.
The hon. Member for Sutton and Cheam asked me whether I could provide the entire list of post offices that are being considered for closure. I cannot do that because there is no predetermined list of post offices that will be considered. No arithmetical formula is being applied to determine the number of closures in an area. The closures in an area will be determined by the present density of offices in close proximity to one another, current and future business volumes, the preferences of individual sub-postmasters—an important consideration—and the public consultation process, which will take place in respect of every proposal, whether it is for closure, merger or relocation.
In some cases, a sub-postmaster may have indicated a wish to close. However, taking account of the position and prospects of neighbouring offices, it will be concluded that closure of that particular office is not acceptable. If the sub-postmaster still wishes to leave, that will need to be on the basis of a commercial sale of 140 the business. One of the consequences of the programme should be a revival of the commercial market for sub-post offices, which has declined in recent years.
Proposals on the future of any individual office will not be taken in isolation but will be drawn up in the context of other offices nearby. The Post Office wants to continue to provide services in convenient locations readily accessible to its customers, which will have the capacity to deal with future levels of demand and will provide improvements. Improving the quality of what is provided at local post offices is an important objective of the programme.
At the start of the programme—the stage that we are in at the moment—all the closures will be in response to requests from those running sub-post offices. Towards the end of the three-year programme there may need to be a small number of involuntary but compensated closures to finalise the shape of the urban network. We are not at that stage yet.
More than 1,800 urban sub-post offices in the UK are in the 10 per cent. most disadvantaged wards in the indices of deprivation 2000. I want to make it clear that, other than in exceptional circumstances, the scope of the urban reinvention programme will not extend to any post office in one of those deprived urban areas that are more than half a mile from the next post office. They are often the last retail outlet of any sort in the area. We want to improve and sustain post offices in deprived urban districts by means of a separate scheme to provide funding for investment and improvement to post office branches that are at risk of closure.
The Office of the Deputy Prime Minister announced at the end of last year the details of a £15 million scheme for England to support core post office services and the development of associated retail facilities in those areas. The compensation being paid under the Post Office's programme will be based on terms agreed between Post Office Ltd. and the National Federation of Sub-Postmasters. The payment will be equivalent to 28 months of the remuneration of an outgoing sub-postmaster, but based on the best annual remuneration for a financial year since 1999. That is based on long-standing arrangements through the joint discretionary fund. Payments are subject to certain conditions, such as a requirement that sub-postmasters at closing branches offer active support for customers transferring to surrounding branches that remain open.
The hon. Gentleman asked about the move to automated credit transfer of benefit payments. I expect that to start on schedule in April, as we always said it would. Over two years, there will be a carefully managed programme of transition from current arrangements, which are essentially based on ration books, to a system based entirely on ACT for benefit payments. We are committed to making sure that people will continue to be able to collect their benefits in cash from the post office if they wish. There will be post office access to a range of bank accounts. Customers will have three account options when deciding how they want to be paid: an existing standard bank or building society account if that account is with one of the banks or building societies that has a commercial agreement with the Post Office; a bank or building society basic account for those who are new to banking and just want to pay money in, get cash out, and perhaps pay bills automatically; and the Post Office card account, which 141 is a much simpler account just for the receipt of benefit and pension and tax credit payments. The card account is more limited than the others, but is undoubtedly the account of choice for a significant number of benefit recipients.
Good progress continues to be made on universal banking services, which are on track, as I said, for delivery in April. An investment of £0.5 billion has been required from the Government to put in place the technology platform to support universal banking. On that platform, the Post Office will be able to build a range of banking services which, we hope, will attract many new customers to their local post office, and so build for sub-postmasters, the people running post offices, and Post Office Ltd., the company running the post office network, a successful and attractive commercial future that will assure the long-term well-being of post offices. In the long term, because of the 142 Government's substantial investment in improving the technology, there is a good future, but we need to make short-term changes to ensure that the configuration of post offices in urban areas is commensurate with current business levels.
§ Mr. BurstowCould the Minister ensure after today's debate that I get a reply to the points that I made in the Christmas Adjournment debate on the introduction of PIN numbers and their use when someone is ill?
§ Mr. TimmsI apologise for the fact that the hon. Gentleman has not received a letter yet, and shall certainly make sure that he receives one from me addressing the points that he made in that debate.
§ Question put and agreed to.
§ Adjourned accordingly at thirteen minutes to Eleven o'clock.