Post Office Network (Isle of Wight) (Hansard, 5 November 2003)

§ Mr. Andrew Turner (Isle of Wight)

I thank you, Mr. Speaker, for giving me the chance to speak about the post office network on the Isle of Wight. I am glad that the Minister for Energy, E-Commerce and Postal Services is in the Chamber. I was pleased to welcome him to my constituency last Friday and I am sure that he saw a little of it, although it was not at its best, given the weather. I assure him that it hardly ever rains on the Isle of Wight—he picked the one out of 365 days when it does.

I want to cover three issues and make one suggestion. First, I do not believe that the Post Office has clear criteria for distinguishing between urban and rural post offices, and neither has it clear criteria for closing post offices under the urban network reinvention scheme. It merely seems to ask, "Who wants the money," and puts forward a post office for closure. I shall illustrate that by reference to Gurnard post office.

Secondly, there has been a continual diversion of business from sub-post offices, which is shown by the difficulty that people have obtaining Post Office card accounts. I shall illustrate that by reference to Wroxall post office. Thirdly, there is no clear joined-up thinking among different Department of Trade and Industry sponsored businesses, which I shall illustrate with reference to Pan post office. My suggestion, in case I do not have time to come back to it, is that the Minister should implement recommendation 18 of the document "Counter Revolution" as quickly as possible to make post offices government—and perhaps even local government—general practitioners.

Recently, Parkhurst, Haylands and Tennyson road, Cowes, post offices have been closed. A second round of consultation has begun on the closure of Gurnard, Oakfield, Avenue road, Sandown, and Pan post offices. The clerk to Gurnard parish council, Mr. Rusty Adams, wrote to me saying: Gurnard has been lumped together by the Government's Countryside Agency into what is known as the Cowes Sprawl and so the Post Office has been classified as Urban, when it is quite obviously in a Rural area. This is totally unacceptable and a nonsense to anyone who knows the Isle of Wight, as Gurnard is the Government's ideal example of a close-knit Community in its own right and happens to be geographically totally separated from Cowes. Gurnard has a population of 3,500 and its nearest available alternative post office is 1.2 miles away along hilly terrain. I contacted the local rural community council, which told me: By no means is Gurnard an urban area. It is most definitely rural". It said that a rural community is defined as one with a population fewer than 3,000. The clerk to the parish council tells me that Gurnard's population is about 3,500. According to the 2001 census, however, the population is 1,696. It depends on what boundaries of the village are adopted, whether it is an enumeration district or the whole parish.

The South East England Development Agency tells me that it recognises communities of 10,000 and under 905 as rural. The Government's rural White Paper gives the figure of 20,000. The Minister advised me, I think in a parliamentary answer, that the appropriate figure was 10,000. Why is Gurnard being considered for closure, especially when the nearest alternative is 1.2 miles away? Why is Oakfield being considered when the nearest alternatives are half a mile away and 0.7 miles away, again along hilly terrain? Both post offices that are proposed for closure have parking facilities. Those that are to remain open as an alternative to Oakfield, which are only about 300 yd apart in Ryde, have no adjoining parking facilities. Can we have clarity of criteria?

I am also concerned about the diversion of business. Customers and post office employees are confused about the introduction of Post Office accounts and the payment of pensions and benefits into building societies. The chairman of the Isle of Wight County Federation of Women's Institutes, Joan Finch, told the Isle of Wight County Press that she feared the flow of business to the post office had been reduced due to people getting their pensions paid into their bank accounts or building societies.

If it were as easy as Ministers appear to think it is to open a Post Office card account, there would be no problem, but the Wroxall post office has given me no fewer than 10 examples of people who have encountered difficulties. It tells me that they are a mere snapshot so there could be many more. I will not read them all out. A lady with a daughter who has learning difficulties contacted the freephone hotline two months ago to find out about the Post Office account and to explain her daughter's difficulties, but she still has not received a reply. A lady in receipt of one benefit was sent a letter by the Department for Work and Pensions saying she was entitled to another benefit. When she phoned to tell it there was an error, the DWP said that there was not. Later, having given her the second benefit, it told her she was not eligible for the benefit and was in arrears with the DWP.

An 84-year-old woman who applied for a Post Office account was sent a letter from Jobcentre Plus about changing to direct payment. One person was told she could not be an agent for both her husband, who is a pensioner, and a parent, because no one could be of pensionable age and still have a living parent. Someone else who used all three of her Christian names was told that she could have only one name on the card. When she rang the helpline and said that she could have as many names as she wanted at a bank, she was told that she should go to a bank.

I do not expect the Minister to respond to those examples specifically, but they illustrate repeated complaints that I get from sub-postmasters about the difficulties they encounter in helping people to open Post Office card accounts. Someone told me that one post office has lost 230 transactions a week as a result of people not claiming their pension or child allowance and 200 transactions a week because of the loss of the key meter service. For a different post office, that amounts to a gross loss of £700 a week.

One problem is that child benefit appears quietly to have been removed from the Post Office. People are 906 getting letters that tell them in small print in the third paragraph to give us the details of the account you'd like your child benefit to be paid into. It goes on: You can use an existing account at a bank or building society if you have one, or if you are claiming tax credits and have already chosen an account for that, you may wish to use the same account. If you don't have an account, or want to keep your Child Benefit separate, the leaflet sent with this letter gives you details of the accounts you could open—including new types of accounts at a bank, building society or at the Post Office". It does not say that one can open a Post Office account even if one has a bank or building society account. I think that that letter is misleading. For the Minister's information, it is from Jim Harra, the director of the Child Benefit Office, is dated 28 October last year, and was sent to a lady in another constituency.

I raised with the Minister's predecessor, the hon. Member for Cunninghame, North (Mr. Wilson), the removal of key meter accounts from post offices, which is a means, albeit unintentional, of diverting business from post offices. I did so after visiting Chale Green post office. The hon. Gentleman responded: It appears in this case that Scottish and Southern Energy believes it can cut costs by choosing Paypoint, which competes with the Post Office in providing services such as bill payment. As Mr. Turner"— he means Mr. Whitney, who is the postmaster— says, it appears that the Post Office will not allow Paypoint to site equipment in its outlets. In these circumstances, the charging facilities will have to be sited elsewhere. Other than the post office, there is no shop in Chale Green. The nearest commercial outlet is Chale filling station, about a mile away. The White Mouse is a wonderful pub, but it does not have a post office in it and is not used to having a key meter site.

Last year, when I was undertaking my mobile summer surgery, I drew up outside Pan post office on a Tuesday morning and was amazed to find 40 or so local people, led by David Boulton and his daughter Trudy Boulton, who are users of Pan post office and were concerned that the key meter was being withdrawn from it. According to the ACORN—a classification of residential neighbourhoods—system, Pan's residents are Type 45…Likely characteristics…low income council neighbourhoods…concentrated mainly in Merseyside. 34% of the population of Liverpool is in this ACORN Type. Well, quite a lot of the population of Pan is, too. The description continues: They are also found to a lesser extent in the major conurbations, central Scotland and parts of Wales. For some reason, the classification does not add, "and in Pan", but there we are. Tony Cockburn, one of only three Labour councillors in my constituency, represents Pan; he is an excellent local councillor. The census figures show that 40 per cent. of Pan's population have health that is only fairly good or not good; 26 per cent. suffer limiting long-term illnesses; 47 per cent. are economically inactive, of which 9 per cent. are permanently sick or disabled and 9 per cent. look after a home or family: 44 per cent. of the population have no qualifications; 9 per cent. of households are headed by a lone parent with children; and 35 per cent. do not have access to a car.

907 An elderly couple on the estate—Mr. and Mrs. Crutcher of 114 Furrlongs—write: Regarding the proposal to close PAN ESTATE POST OFFICE, are you and the powers that be fully aware of what this will mean to partly handicapped 85-year-old people who rely on the P.O. for pensions and paying Council Tax, Rent, Water Rates. Many people like my husband and I have not got a Bank account so we rely on the P.O. I have lived on the estate for 40 years, without these problems. The Council are talking of building more houses in this area; without a P.O. young and old are going to realise a P.O. is essential. Each time we get the Bus to Newport, it costs 80p return each. I cannot go to the Newport G.P.O. as I can only walk a few steps on crutches. My husband is unable to drive owing to a heart problem. That letter illustrates the concern on the Pan estate about the closure of the post office, which is run very effectively by Jean Sampson. We believe that the closure has been advanced by the withdrawal of the key meter scheme. Pan post office is located within the Costcutter store on Royal Exchange—the name of a street in Pan. The store is run by Mr. Paul Brett, who has done all in his power to keep the post office open.

Following the reply that I received from the hon. Gentleman, I received letters from Dave Barnes of Ofgem, from the Post Office and from Energywatch. about the withdrawal of the key meter scheme. Ofgem wrote: The decision on which payment outlets are used is a commercial one for companies. Outlets are operated through post offices, newsagents, convenience stores and garages. Many of these local outlets operate as agents for PayPoint or Pay Zone. which compete with post offices for this business. However, some existing agents could not or did not want to provide the PayPoint service, among these being the post office at Chayle Green, Isle of Wight. It was not that they did not want to; it was that they were not allowed to do so.

Mr. Jim Green, the head of Consignia Utilities Markets, told me that Being aware of the arguments behind our current policy you will understand that we have to consider the viability of the network as a whole, so that occasionally difficult decisions have to be made in relation to a single Post Office branch in order that Post Office Ltd. may continue to offer integrity of service across all our branches nationwide. I am therefore afraid that we have no room for manoeuvre in this case."— that is, to allow the post office to run PayPoint instead of key meter. Mr. Stephen Reid, chief executive of Energywatch, tells me that Scottish and Southern Energy advise us that it has already withdrawn the above services having tried to get the PowerPoint facility into the exact same premises—at Costcutter—which houses the post office…However, we have noted that Consignia Royal Mail, which is in direct competition with PowerPoint, has objected to this facility and thus 'blocked' this initiative. Those are two businesses sponsored by the Minister's Department with a panoply of regulatory and watchdog organisations, such as Ofgem, Postwatch and Energywatch, which seem incapable of realising the damage that they are doing to the Post Office network.

I will not go on at great further length, but I thank the Minister for writing to me on 24 March as follows: Post Office Limited agents can install unbranded PayPoint terminal in their private businesses but cannot use these for products or services that compete with those offered by Post Office 908 Ltd. Electricity Key recharging falls into this category. This restriction is an essential element in protecting the viability of the Post Office branch network as a whole. That does not wash with residents on the Pan estate. Mr. Alan Young, director of corporate communications of Scottish and Southern Energy, writes that SSE discussed providing an unbranded service at Pan post office with Post Office Counters Ltd. to try to take this forward but regrettably they declined to co-operate with this option. As late as 5 June, April Groombridge of the network development, a department of PayPoint, offered a PayPoint terminal to Paul Brett at Pan's Costcutter store, but as far as he knows he is still not able to have one. He says: The post office at Pan is profitable at the present time because my wife and I have always kept the office's costs very low (never increasing them), never taking on anything that would be to the financial detriment of the Post Office (refusing Pay Point, cash machines, etc, advertising and promoting the Office every three weeks for the last three years and investing heavily in our business. He feels let down. He writes: The Post Office and Labour Government should realise that of any Office in the Newport area, including the General Post Office, Pan Sub-office has the potential to remain profitable, in what we know are difficult times for the Post Office.

My concern is that the post office network is not being properly exploited. It would benefit from the Government's general practitioner scheme. It would certainly benefit if local government used it more, as it would benefit if utilities used the network more. The utilities went to PayPoint from key meter because the promoters of PayPoint were able to invest in the replacement of electricity meters in people's homes, and the Post Office did not have the capital available to do so. That has led to the danger faced by Pan post office and a number of the rural post offices on the island that are not covered by the urban network reinvention scheme.

I am concerned that the Post Office is promoting the closure of post offices at random in urban areas depending not on need and not on geography but on the willingness of the sub-postmaster or sub-postmistress concerned to retire. That is a wholly arbitrary and unreasonable basis on which to hand out Government money— taxpayers' money, money from the people—in the very communities that are being affected by these closures.

§ The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms)

I congratulate the hon. Member for Isle of Wight (Mr. Turner) on securing this debate. I thoroughly enjoyed my visit to his constituency last Friday, the weather notwithstanding—it was sunny for a fair part of the day, but wet for the rest. I welcome the opportunity to respond to the issues that he has raised this evening. I fear that I may not be able to cover all of them, but if I cannot respond fully now, I shall write to him.

I can give the hon. Gentleman an assurance that we are firmly committed to maintaining a viable nationwide network of post offices, which are an extremely important focal point for the local community, particularly for people who do not find it easy to get 909 around. I can also give him an assurance that everybody who wishes to continue to receive their benefits in cash from their local post office can do so. That has been a given in the introduction of direct payment, which is currently under way.

Recommendations in the widely welcomed report of the performance and innovation unit in 2000 formed the basis of our policy on the post office network. The Government accepted all the PIU recommendations, including the recommendation that, should the Post Office decide that fewer post offices were needed in some areas, the Government should consider providing funding to ensure that the sub-postmasters affected could be compensated adequately for the loss of their business. I think that that is fair. The hon. Gentleman suggested that it was a misuse of public funding, but I do not think that it is. The value of post office businesses has declined in recent years for a variety of reasons that I shall come on to. Many people who have run those businesses have worked hard for a long time, and we took the view that it was appropriate for them to be compensated fairly if their business closed under the programme. Last November, following parliamentary approval for the funding, Post Office Ltd. initiated its programme for urban post offices.

There are nearly 17,000 post offices around the UK—more than all the banks and building societies in the country put together. Tellingly, there are more than 1,000 urban sub-post offices with at least 10 other post offices within a mile. There is simply not the business to sustain so dense an urban network, and sub-postmasters have been finding it increasingly difficult to earn a reasonable income from their business. The great danger facing the Isle of Wight and elsewhere if nothing had been done was an unmanaged decline in the network, with urban post offices closing haphazardly and serious gaps in the service opening up. However, there is a properly managed process for the Post Office to configure its network to meet the needs of the communities that it serves and fit the level of business going through the network. Two thirds of the urban population live within half a mile of two or more post offices, many of which are struggling. The National Federation of Sub-Postmasters has supported the process because everyone accepts that we need a properly managed reduction in the number of urban post offices so that the network can have the viable and successful future that we all want.

There are many reasons for the decline in post office business, but I remind the hon. Gentleman that the trends that have led to those problems are long-standing in nature. For example, more than 43 per cent. of benefit recipients already choose to access their benefit payments via bank accounts, compared with 26 per cent. in 1996. The traditional business on which post offices have depended in the past has been declining. That is why it is so important that we have been able to invest an enormous amount—£500 million—to equip every single post office in the country, including all those 910 on the Isle of Wight, with technology to support banking services. That opens up a new market for post offices that can give them the prospect of a successful future. I am very encouraged by some of the changes that we have seen as a result of that investment, and I think that they augur well for the future.

The hon. Gentleman was especially concerned about the criteria for including particular offices in the urban reinvention programme, as opposed to rural post offices, which are outside it. Post Office Ltd. analyses an area as either urban or rural on the basis of whether the branch in question is located in a community of more or fewer than 10,000 inhabitants—the figure that he correctly quoted from my letter to him. The Post Office adopted that broad definition in autumn 2000, when the Government placed on it a formal requirement to maintain services and prevent avoidable closures in the rural network. We have seen a dramatic reduction in the number of closures in the rural network as a result.

The Post Office has carried out detailed planning to establish which branches are classified as rural and which are classified as urban. It has developed a sophisticated geographical mapping computer model that measures population in terms of contiguous or very close agglomeration. Where a number of villages or small communities adjoin one another or a larger town and the aggregate population exceeds 10,000, the model reflects that fact and classifies the area as urban. I can well understand that customers using the Gurnard branch think of themselves as a distinct and separate community, but given the concerns expressed about that branch, the Post Office has rechecked its analysis and confirmed its classification of the office as urban on the ground that it is located within the contiguous population area of Cowes. That is consistent with the approach adopted nationally to classify the entire network. In arguing against at least some aspects of the proposals that have been made for urban offices on the Isle of Wight, I do not think that the hon. Gentleman is on strong ground on that particular point. However, he was on stronger ground in making another point, which he may want to take further. I shall return to that point in a moment.

Initially, closure proposals under the Post Office Ltd. programme were focused on single offices known to be most at risk of closure because of poor viability, in order to minimise the possibility of unplanned and unmanaged closures occurring and gaps opening up. However, the company accepted that there was a lot of uncertainty about the future shape of the network and it has now undertaken to produce its proposals on an area-by-area basis using parliamentary constituencies or groupings of constituencies. Postcomm has commended Post Office Ltd. for that response, as has the Select Committee on Trade and Industry. Producing proposals on an area-by-area basis, as has now been done for the Isle of Wight, means that everyone can see what the end point will be and gives a clear view of the level and location of service provision at the end of the programme. I understand that, in order further to minimise uncertainty, Post Office Ltd. will bring the whole programme forward by a year, so it will all be over by December 2004.

911 Every proposal is subject to public consultation, and the consumer watchdog Postwatch has a very important role. The hon. Gentleman did not mention Postwatch. but it is consulted on every proposal and is monitoring the programme as a whole. I met Postwatch representatives recently to discuss how that is going, and it is working diligently on the matter. Given the new area basis to which I have referred, Post Office Ltd. has agreed with Postwatch to extend the period of public consultation, which was formerly a month for each closure, to six weeks for the area as a whole. It is important that those who are concerned about certain elements of the proposals for the hon. Gentleman's constituency should take them up with Postwatch, which will want to satisfy itself about them. As he knows, the closing date for representations is 2 December, so there is still time to do so.

912 The hon. Gentleman may have an alternative proposal—perhaps that one of the offices should be retained, while another that is not in the frame for closure should be closed instead. If so, I encourage him to draw it to the attention of Postwatch.

My time is rapidly running out, but I want to make one last point. The hon. Gentleman said that one of the offices proposed for closure is 1.2 miles from the nearest post office. The objective of the programme is to ensure that at least 95 per cent. of the urban population will be within a mile of their nearest post office.