Postal Services

HC Deb 05 July 2004 vol 423 cc550-606

Mr. Speaker

I have selected the amendment in the name of the Prime Minister.

3.33 pm

Michael Fabricant (Lichfield)

I beg to move,

That this House notes the failure of Royal Mail plc to deliver first and second class mail reliably and on time and regrets the damage this is doing to businesses and private customers alike; notes with particular dismay the threatened closure in Leicester of the Knighton Church Road Post Office, Knighton, and the East Park Road Post Office, Spinney Hills; calls on the Government to end the uncertainty facing the future of rural post offices as a result of the Government's refusal to announce further funding until after 2006; deplores the inadequate consultation procedure of the Urban Reinvention Programme despite the Government's recent announcement to review urgently the arrangements for the consultation currently employed; expresses continued concern about the Government s implementation of the different Direct Payment options which has caused significant problems particularly for elderly and disabled customers in Stechford, Shard End and Hodge Hill in Birmingham; condemns the Government for its failure adequately to promote the take-up of Post Office Card Accounts; and further calls on the Government to provide more details on the implementation of the Exceptions Service.

You will have heard of the Midas touch, Mr. Speaker. Unfortunately, the Government seem to have the Frank Spencer or Del Boy touch. No matter how much taxpayers' money they throw at a problem, it all goes horribly wrong. No wonder, then, that so many people feel let down by Labour—and so it is with our postal services, which we must never forget the Government own. Too many aspects of Royal Mail's operations are failing, and that is a matter of grave concern to both sides of the House. Of course, many thousands of postal workers and management take their job seriously and are highly professional, but a minority are not.

On 6 May this year, the Secretary of State for Trade and Industry apologised to the House and to the people of this country for Royal Mail's failings. She accepts that the buck stops with her, and I give her full credit for that. However, it is not unreasonable to say that an apology is not enough. The Government have a duty to ensure that standards rise.

In 2001, the Royal M ail Group recorded a huge loss of £1.1 billion. I might add that that was £1.1 billion of taxpayers' money. With fresh management, that has been turned around to some extent, to a profit of £220 million in 2003. That is without question a considerable achievement, and a welcome one at that. It came, however, at considerable cost.

In order to prevent the company from haemorrhaging money at an alarming rate, a tough restructuring process was announced by the Secretary of State in March 2002. I am not here today to argue that many of the tough decisions that have been made were not necessary: they were, but their implementation and the methods employed have been immensely damaging.

Mr. David Cameron (Witney) (Con)

Does my hon. Friend agree that one of the ways in which the Post Office has cut its costs is by getting rid of two deliveries in a day? Is he aware of the problem that some businesses, especially in rural areas, are facing, which is that the single delivery is now coming too late for the banks' cut-off time for same-day cheque crediting? For small, growing businesses in constituencies such as mine, that is calamitous and it needs to be sorted out. If we are to have one delivery a day, it needs to be made in good time.

Michael Fabricant

My hon. Friend, who is an assiduous Member and constituency MP, raises an important point. The problem to which he refers is creating difficulties not only for growing businesses, but for well-established mail order firms, as I shall mention later. The biggest problem of all, which I shall also mention later, is uncertainty. People could plan ahead if they knew precisely when the delivery was going to be made, but in so many areas—not only rural areas, which he mentioned, but urban areas—the time of the first delivery seems to differ from day to day.

Mrs. Gillian Shephard (South-West Norfolk) (Con)

My hon. Friend and my hon. Friend the Member for Witney (Mr. Cameron) mentioned the problems caused for businesses by a single delivery postal service. Will he comment on the extraordinary case of 49 packages sent to East Anglian MPs labelled "Postwatch misdelivery campaign" and posted on 13 May, none of which was delivered to Members of this House? It is indeed a mysterious occurrence, on which the chairman of the Post Office can throw no light, save to ask me what the turnaround time is for letters in my office. Does my hon. Friend have any points to make about that?

Michael Fabricant

If the issue were not so serious, it would almost be a laughing matter. I wonder whether the problem arose because of unreliability in the postal service or whether it could be connected—perhaps the Minister will expand on this when he replies—with the question of deliveries during the general election, when some items of mail were not delivered. It is not for Post Office workers to decide whether a Post Office item should be delivered, so the question is whether it was incompetence or deliberate action by Post Office workers that prevented what was issued by Postwatch from being delivered.

Mrs. Shephard

I thank my hon. Friend for giving way again. The chairman of the Post Office, to whom I obviously wrote, replied: We have no trace of the letters being posted, as they were reportedly posted over a post office counter. The most likely place of loss would be at that post office … which is one of our best with no previous problems.

Michael Fabricant

My right hon. Friend makes a serious point. If the Post Office and the Minister have doubts themselves about the service of Post Office Counters Ltd., it is a clear indication of how far standards have fallen in the past few years.

Mr. Martin O'Neill (Ochil) (Lab)

rose—

Michael Fabricant

If I may, I shall move on, but I shall give way later.

First, I shall examine post office closures. As urban and rural post offices continue to close across the country, the needs of our local communities and the vulnerable people within them are not being adequately met. In urban areas, the urban reinvention programme—in truth, the urban post office closure programme—is occurring at breakneck speed. Of the 9,000 urban post offices operating at the start of the programme, 1,211 have already closed, and that figure is set to rise to 3,000 by the end of this year.

Mr. Humfrey Malins (Woking) (Con)

I am following my hon. Friend's argument with great care. The post office is a vital part of any community, and not only rural post offices but urban post offices are under threat, including five post offices in my constituency. Does my hon. Friend, like me, believe that post offices, which are an important social addition to any community, should be preserved?

Michael Fabricant

I agree that post offices should be preserved and that they play a vital part in the fabric of life in our constituencies. Like the National Federation of Sub-Postmasters, however, I "regretfully and reluctantly" accept the need for some closures, which so many people feel are badly handled. Local characteristics are not being taken into account; local communities are not being properly consulted; the long-term planning is inadequate; and a co-ordinated framework has not been implemented.

On 13 January this year, I made those points at the Dispatch Box, and it must be said that the Government acknowledged the problems—again, I welcome that acknowledgement. In a written ministerial statement, the Minister for Energy, E-Commerce and Postal Services stated: In particular, the consultation arrangements have been criticised. There has been mounting evidence that in too many cases Post Office Limited has not handled them appropriately, or with sufficient sensitivity. He went on to announce changes to the consultations, which would: make them more inclusive and appropriate to achieve a viable network to serve the public after the programme is concluded."—[Official Report, 5 February 2004; Vol. 417, c. 49WS.] I thought, "Hooray! The Government are finally getting a grip," but I was just too trusting.

Gregory Barker (Bexhill and Battle) (Con)

Does my hon. Friend agree that the issue concerns not only the nature of the closure programme, but the transparency of the process? When my constituents have campaigned to save post offices, they have been unable to get round the Post Office, which will not make available the business case on which the closure of local services is based. My constituents understand that hard economic decisions must sometimes be made, but, given that the Post Office does not reveal what its decisions are based on and offers cash incentives to close post offices, my constituents are sceptical about whether the process is anything more than closure by diktat.

Michael Fabricant

My hon. Friend is renowned for having his finger on the pulse, and he is right to say that the process is not transparent.

Postwatch remains critical. It states that there is little evidence of Post Office Limited attempting to mix and match 'leavers' and 'stayers' to produce a smaller but optimised network as envisaged by the Performance and Innovation Unit Report of 2000". Postwatch issued that statement after the Minister released his written ministerial statement that all things would change. I was gullible to believe that things would change—they have not.

Mr. Mark Field (Cities of London and Westminster) (Con)

I agree with my hon. Friend's line of argument on the urban reinvention programme. Does he agree that such decisions too often involve a deal being cut between the Post Office and the long-standing—or, perhaps, short-standing—local postmaster, rather than their being according to community need or finance? As my hon. Friend the Member for Bexhill and Battle (Gregory Barker) says, such a lack of transparency does not make local residents think that the process is being run fairly or firmly.

Michael Fabricant

As ever, my hon. Friend raises an important point. He refers to the compensation programme that is made available to post office operators—postmasters—who give up their post offices. That compensation is very generous and equates to around 30 months of profit, which is more than someone would normally get. The Minister may correct me if I am wrong. That is why Postwatch said that there is no real effort to mix and match to ensure that services are provided to those who need it in a given locality.

Mr. O'Neill

rose—

Michael Fabricant

I give way to the right hon. Gentleman.

Mr. O'Neill

I am not right hon.—I may well deserve to be, but that is for others to decide.

I have two points for the hon. Gentleman. First, he made some very serious allegations about the nature of postal deliveries during elections. If those allegations are of any substance, they should have been referred to the Electoral Commission much sooner than today, with the appropriate evidence. If he did so, perhaps he could tell us about its findings.

Secondly, although it is true that compensation is generous and that there are problems in relation to mixing and matching, the hon. Gentleman is not telling the full story. I understand that between one in three and one in four of all applications for early premature closures has been refused—in other words, of the 2,500 to 3,200 applications that have been made, around 800 to 900 have been refused. A substantial number of people who have tried to get out of the postal services for financial reasons have been refused. The hon. Gentleman is not giving the whole picture.

Michael Fabricant

The hon. Gentleman, who is Chairman of the Select Committee on Trade and Industry, should be a Privy Councillor, but sadly he is not.

I tabled a question to the Minister about deliveries to which he gave a full comprehensive written reply, so I can at least say that the matter is in the public domain if the Electoral Commission wishes to take up the matter.

As regards post office closures, I am merely repeating what Postwatch says. I quote it again: there is little evidence of Post Office Limited attempting to mix and match 'leavers' and `stayers'". Postwatch was established to watch the Post Office as the guardian of the consumer. I would not make a statement of such importance were it not for the fact that Postwatch has made it.

Postwatch also expresses particular concern about the future of post offices in deprived urban areas where there is nothing in place to discourage sub-postmasters from quitting and taking a generous golden goodbye from Royal Mail, thus creating gaps in the network. That point was echoed by my hon. Friend the Member for Cities of London and Westminster (Mr. Field). Indeed, the compensation offered by Royal Mail is often an encouragement to do just that. I think that Members on both sides of the House remain of the view that consultation remains inadequate.

Let us take a constituency at random. When I was in Leicester, South last week, I learned that 10 post offices are due for closure in the city. More than 15,000 people signed a petition to keep them open. Mrs. Gladys Kenney, who is 86, is very worried about the closure of the West Knighton post office on Aberdale road. Her nearest post office is a 20-minute uphill walk away; and, like many other post office users, she is old and infirm. Why does the Post Office still refuse to take such factors into account? Fortunately, Chris Heaton-Harris, the Conservative parliamentary candidate in Leicester, South, is fighting to keep the post office open. He told me: I want to retain the excellent local services provided by the post offices at West Knighton and Boundary Road and I am determined that other possible closures including the Knighton Church Road Post Office just don't happen. I support him in that fight. Chris has collected thousands of names on a petition, and I hope that the Post Office will listen to him and to other post office users.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich) (Lab)

Will the hon. Gentleman give way?

Michael Fabricant

I shall give way to—is she the "right hon." Lady?

Mrs. Dunwoody

No. The hon. Gentleman should know that we Select Committee Chairmen are the foot soldiers of Parliament.

I have listened to the hon. Gentleman carefully but I am not clear about whether he is saying that the Post Office should not offer compensation to someone who runs a business and discovers for various defensible reasons that it is no longer viable or whether he simply suggests that that person should be forced to continue until inevitable bankruptcy.

Michael Fabricant

I am sorry if I have not made myself clear. I shall do so now. As in all things, it is a question of balance. Over-generous compensation that creates gaps in the network must be wrong, but no compensation at all would be equally wrong. My point—perhaps more important, that of Postwatch—is that the balance should be even to ensure that there are no holes in the network.

Gregory Barker

I am especially interested in my hon. Friend's comments because I was in Leicester, South last week. People there are angry, as are many Conservative Members who have heard the extent of people's anger about post office closures. The initiative to close those vital community assets does not come from the postmasters or people who run the post offices saying that they are not viable, but from Whitehall. Lucrative packages are being offered to bribe postmasters to close services in the full knowledge that that amount of money is unlikely to come the way of people on such incomes again. They are left in an invidious position. The initiative to close the post offices comes from Labour in London.

Michael Fabricant

My hon. Friend makes his point powerfully. The Secretary of State was right to accept responsibility. The way in which Post Office Ltd. and the Royal Mail Group were set up means that the Government own 100 per cent. of the shares. She accepts that the buck stops with the Government, who must ensure that the post office network remains viable.

Mr. Michael Weir (Angus) (SNP)

I have never been to Leicester, South and I have no intention of going there in the next week or otherwise, I am interested in the hon. Gentleman's comments and I agree with him up to a point, but given that post offices also closed under the previous Conservative Government, how does he define the gaps in the system? What would he put in place to ensure that gaps in the network did not occur?

Michael Fabricant

It is not a matter of how I define the gaps but how the Post Office defines them. The Post Office says that the distance from one post office to another in an urban area should be no greater than 1 mile if that can be avoided. Moreover, the Post Office is meant to take into account obstacles to people walking from one area to another. There is no point in the presence of a post office a few hundred yards away if a major motorway, canal or possibly Ben Nevis are in between. The Post Office must take that serious issue into account given that so many customers tend to be elderly. That is the point about balance that I made to the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) earlier.

My hon. Friends have mentioned the position in urban areas and I shall now move on to that in rural areas. Uncertainty about the future of the rural post office network hangs over it like the sword of Damocles. Sub-postmasters continue to leave in large numbers. Indeed, the number of closures in rural areas last year was up to 149 from 115 the previous year, despite Government support. An uncertain future means that it is difficult to find people who are willing to take over rural post offices that are for sale. The Government have provided a three-year funding programme to support rural post offices, and I applaud that. However, that finishes in 2006 after the next general election. What will happen then? Nobody knows, and that is the problem. It is essential that the Government make it clear how these businesses are to be made viable in the longer term, but they have consistently refused to do so. I hope that the Minister will step aside from that uncertainty when he responds to this debate, and make it clear what the future of rural post offices is to be.

This uncertainty is having a devastating impact on rural communities throughout the country. Rural post offices play a critical role in sustaining the social and economic fabric of our society, and their closure has far-reaching consequences. Closures cause considerable anxiety to many people, particularly the elderly and the disabled and those who do not, or cannot, use private transport to get into larger towns. The Government have caused enough damage to rural communities, and they must now make the future of rural post offices clear. I hope that the Minister will do so today.

Leaving aside the issue of post office closures, we have seen a devastating deterioration in the standard of the Royal Mail's delivery service, as my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) pointed out so well. In the latest report on mail delivery, all 15 of the existing 15 delivery targets were not met in the most recent financial year: 15 out of 15. This included a failure to meet the minimum targets for the delivery of both first and second class post. In the year to March, 90.1 per cent. of first class mail was delivered the next day, but the target is 92.5 per cent. Meanwhile, 97.8 per cent. of second class mail arrived on time, which is below the target of 98.5 per cent.

Royal Mail is due to make compensation payments of about £80 million, on top of any penalties that the industry regulator, Postcomm, might impose. That is £80 million of taxpayers' money. Furthermore, there have been desperate problems associated with the decision to abolish the second delivery, as my hon. Friend the Member for Witney (Mr. Cameron) pointed out. In principle, that seemed like a sensible cost-cutting measure. However, the reality is that the one single delivery is now due at any time between 7 am and—well, who knows when? This is causing havoc for mail order companies and other businesses that need a quick turnaround. These failures to meet minimum delivery targets and the switch to a single daily delivery are causing considerable damage to both business and private customers, and need urgently to be addressed.

Gregory Barker

My hon. Friend is being extremely generous in allowing me to intervene on him again. Does he agree that the abolition of the second delivery effectively means the end of the next-day service for many people who have to leave home at a reasonable time to get into the office? They will no longer be able to have something sent to them in the certainty that they will receive it before they leave for work. That means the end of a proper first class post service.

Michael Fabricant

My hon. Friend is absolutely right. He comes from a business background, and he can anticipate the problems that businesses encounter. This is a serious issue—[Interruption.] I do not know what the hon. Member for Ochil (Mr. O'Neill) just said, but as Chairman of the Trade and Industry Committee he will understand the importance to trade, industry and businesses of a reliable postal service.

Mr. O'Neill

rose—

Mrs. Angela Browning (Tiverton and Honiton) (Con)

rose—

Michael Fabricant

Before I give way to the hon. Member for Ochil, I shall give way to my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning).

Mrs. Browning

I am glad that my hon. Friend has moved on to the subject of businesses in rural areas. I have heard of a lot of problems in that regard, not least from a major company in my constituency which used Royal Mail to send out a coupon that was time-limited, only to find that it had been delivered after the time limit had passed. It was a seasonal matter, and that company says that it is now desperate. My business community is crying out for some competition and reliability so that it can get on with its business, because Royal Mail is unable to assist it any more.

Michael Fabricant

That is an unfortunate fact. Often deliveries are time critical, and when a delivery is not made on time that creates real difficulties for business.

Mr. O'Neill

I understand that, in a previous incarnation, the hon. Member for Bexhill and Battle (Gregory Barker) was a Merchant Banker—capital M, capital B. He probably started work rather early in the morning. Most people who do so never see the mail until they come back home, and there are arrangements whereby businesses can have it delivered at a given time on a regular basis. Once again, I do not think that the hon. Member for Lichfield (Michael Fabricant) is telling the whole story. A lot of businesses can get the mail delivered within reasonable bounds of their choosing. Most of the working population, especially those in the south-east who have to commute, must leave the house long before the mail arrives.

Michael Fabricant

With the greatest respect, I do not think the hon. Gentleman is quite in touch with reality. I have received hundreds of letters from different people who say that the Post Office says to them, "If you want the delivery, you can collect it yourself." However, often it is not practical for businesses or individuals to collect the post themselves. Anyway, what have we come to when the Post Office says, "We can't deliver to you reliably; you've got to go and collect it from the sorting office yourself'? That is nonsensical.

More seriously, Richard Bradley tells me that, in Northampton, despite paying for his mail to be diverted to another address, that did not happen—even after making many complaints. What was the result? His postal ballot paper was lost. As a consequence, he was prevented from voting. Such mistakes have serious implications, not only for business, but for our democracy.

Even services here in Parliament are not immune to the effects of such failures. On 12 May 2004, the Serjeant at Arms informed all Members of Parliament that, for a three-month trial period, starting on 1 June—we all saw that announcement in the all-party Whip—Members' incoming mail that is forwarded from Parliament to an external address would be sent by first class post instead of by special delivery. He did that for all the right reasons—it would lead to savings to the taxpayer of £500,000 annually. However, on 3 June—just three days, not three months, after the start of the trial—a new message came from the Serjeant at Arms saying that the trial had to be suspended until Royal Mail can guarantee a First Class delivery service". If this were not so serious, it would be the subject of an Ealing comedy. Frankly, the complacency of Ministers is a disgrace.

We have used Opposition time before to debate the Government's direct payment programme; we return to it again, and make no apologies for that, because we recognise the scale Dr the public's concern at the way changes are being made. The Government, in contrast, have been more reluctant to debate the issue in their own time. I am not surprised.

To those of us across the House, not just those on the Conservative Benches, who suggested that there are too many steps needed to open a Post Office card account, the Secretary of State for Trade and Industry said: Let us be clear: then are three steps that individual claimants need to take. Strangely, online, the BBC set out seven steps; Postwatch listed eight; and a Post Office analysis detailed 20, from the receipt of the Government letter asking for account details to the claimant's receipt of cash through the card account. To those of us who complained that the Government are biased against the Post Office card account in favour of bank and building society accounts, the Secretary of State said that about 2 million Post Office card accounts have already been opened. That scarcely bears out the absurd allegations being made about how we are biasing the system, driving people away from the Post Office card account and making it impossible for anyone to open one. That is complete nonsense."—[Official Report, 24 March 2004; Vol. 419, c. 909–10.] Well, if it is "complete nonsense"—[Interruption.] Both Ministers say that it is. Why, then, did Age Concern, Citizens Advice, the National Consumer Council, the National Federation of Sub-Postmasters, the Communication Workers Union and Amicus, the National Federation of Women's Institutes, and members of the public across the country share our concerns?

If it is "complete nonsense", why did a leaked Department for Work and Pensions document say to staff: We need to pay most of these customers into bank accounts which cost 1p, rather than into Post Office card accounts which cost up to 30 times more You"— post office workers— should be aiming to get nine out of 10 new claimants to use bank accounts, with a small proportion paid through Post Office card accounts"? There it is in black and white—concrete evidence that the Government have been determined right from the very start to steer people away from the Post Office card account. I will happily give way to the Minister, who, I hope, is going to apologise to the House.

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): No, I am going to set the record straight. As the hon. Gentleman well knows, the memorandum to which he refers was a Jobcentre Plus memorandum, and was therefore aimed at people of working age. As he well knows, the Post Office card account, whatever its other merits, cannot help people to be ready to accept a job, as it cannot be used to accept payments of wages. That is an important message and it would be irresponsible of Jobcentre. Plus staff not to get it across to people actively seeking work.

Michael Fabricant

I hope that the Minister is not saying that people of working age should not receive benefits? Is that what he is saying? Is he saying that people of working age should be discouraged from opening a Post Office card account because it would make it easier to get benefits? Of course he is not. The point at issue is that the Government and the Secretary of State denied that they were making it more difficult to open a Post Office card account, but it is clear from the memo that that process is being made more difficult. Besides, if Post Office Ltd says that it takes 20 steps to open a Post Office card account, is it not difficult? Of course it is.

It is fair to say that many pensioners have chosen Post Office card accounts. Three million have done so, as the Government's amendment to our notion states. I have no doubt that the Minister will quote that number in his response, but the question is: how many more people would have chosen the account if the Government had made the process more simple? There are no grounds to congratulate the Government on card take-up. On the contrary, I congratulate those pensioners who, despite all the hurdles and obstacles that the Government have put in their way, have been able to open the account. It is they whom we should congratulate.

The Secretary of State for Trade and Industry became remarkably aggressive about our many concerns in the last debate. Our claims were described as "complete nonsense" and "absurd".

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

Yes.

Michael Fabricant

As the Minster confirms from a sedentary position, the Secretary of State said that our claims were absurd.

Yet, in the past few months, we have discovered that the Government have, very belatedly, started to take some steps to improve the Post Office card account process. A written answer from the Department for Work and Pensions, dated as recently as 7 June—perhaps the Minister for Energy, E-Commerce and Postal Services is not aware of this—stated: We have already made some improvements to the Post Office card account process where real problems have been identified and continue to closely monitor its operation. We want to make further changes which would include less form-filling and a straightforward process for customers getting account details back to DWP via their postmaster."—[Official Report, 7 June 2004; Vol. 422, c. 84W.] At last, there is an admission that our concerns were justified. We—and the vulnerable constituents whom we serve—must be grateful for very small mercies. Yet this has taken two years to put right. Even now, Postwatch says that the changes are not as extensive as it would have liked and that they do not tackle the large backlog of applicants who are stuck in the application process.

Finally, I want to ask specific questions of the Minister. We welcome the exceptions service, under which cheques are issued to recipients of benefits, but the Government must do all that they can to publicise it. What steps are being taken to ensure that such publicity will happen? The cheque-based system is vulnerable to periods of disruption such as postal strikes, or even first-class post delivery. What contingency arrangements are in place to ensure that people will continue to receive their benefits in such circumstances? I look forward to the Minister's response.

So there we have it. I suspect that the Government do care about the vulnerable; I suspect that they do care about the elderly; I suspect that they do care about businesses that use the Post Office. But it is what the Government achieve, and what they deliver with taxpayers' money, that will count in the end.

The Prime Minister said that 2001 would be the year of delivery. That died a quiet death. With a million truants on our streets, a million people waiting for hospital appointments and a million illegal asylum seekers in our country, and with the north-south and rich-poor divides becoming even greater, there has been no delivery. In 2004, we have had the year of non-delivery—non-delivery of Britain's mail.

4.11 pm

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

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof: supports the Government's strategy for a viable Post Office network; welcomes the delivery by Royal Mail of 93 per cent. of first class letters the next day in the first half of 2003–04; shares the Government's disappointment over the drop in performance since then, which rightly falls short of customers' expectations; calls on Royal Mail and the unions to work together to improve the quality of service; notes that the closure of any post office is regrettable but supports the Government's view that, without rationalisation, unplanned closures would continue, leaving damaging gaps in the network; supports the Government's commitment to ensure that at least 95 per cent. of the urban population will live within one mile of their nearest post office; supports the Government's commitment to ensure funding of rural post offices until at least 2006; welcomes the changes to the urban reinvention consultation process and the extension of the consultation process from four to six weeks; supports the Government's move to Direct Payment and welcomes the fact that already more than half of customers are getting their benefits, pensions and tax credits paid straight into accounts, of which 3.2 million are Post Office card accounts; notes that the Opposition wasted millions of pounds of taxpayers' money on the Benefit Payment Card scheme; supports the facility for those who cannot be paid through an account, particularly the most vulnerable older people, to receive a cheque payment; and recognises that change was needed and congratulates the Government for its strong, decisive action.

I am delighted to have an opportunity to debate postal services and the post office network.

No one disputes that the Post Office is a business that has had its problems. Just two years ago, Royal Mail was losing over £1 million every working day. It lost more than half a billion pounds in the financial year 2002–03, the year after the one mentioned by the hon. Member for Lichfield (Michael Fabricant). But last year, as the hon. Gentleman said, it made a profit—a small profit, it is true, but constituting an unmistakable sign that the business is being turned around, that the Government's policy is working and that the customers of the Post Office can look forward to big improvements. As the hon. Gentleman said, that is a considerable achievement, and it is to his credit that he acknowledged it.

The reason that turnaround is being achieved is very straightforward: the Government are investing in Royal Mail. The last Government, for 18 years, simply used it as a cash cow, scandalously neglecting the needs of the business. Today we are seeing the investment that the business needs.

Mr. Simon Burns (West Chelmsford) (Con)

If everything is so wonderful because of what the Government are doing, can the Minister explain why Royal Mail missed four targets in 2001–02, 12 in 2002–03 and all 15 in 2003–04?

Mr. Timms

As I have been saying, the business is being turned around. That process is under way as we speak. The hon. Gentleman knows very well that it is not possible to go on taking money out of a business and expect it to go on generating cash. That is what the last Government did: they took up to 93 per cent. of the profits. As Allan Leighton said when the losses were at their height, these losses did not happen overnight". He said unresolved issues and problems stretching back for up to a decade are reflected in these results". The truth is very simple. The investment that should have been made under the last Government was not made, and the business therefore inexorably got into the problems about which we have quite properly heard today, but which are now being addressed as the business is turned around.

Past neglect has been at the root of the problems. If a business is to be healthy, there must be investment, and the last Government did not invest in the Post Office. After the failed attempt at privatisation, they simply allowed it to drift rudderless. There was no direction, and it fell sharply behind its international counterparts. By contrast, we have given the organisation a direction, turning the business around, investing on a completely unprecedented scale, and as a result giving the business a prospect not of the depressing decline of the past but of a bright future in a dynamic and competitive market. That is good news for the people who work in the Post Office, and good news for all of us too, because we all depend on the services that the Post Office provides.

Mr. John Horam (Orpington) (Con)

The Minister makes the point that the Post Office is turning round because of investment. On the contrary: it is turning around because it is dumping the second daily service and closing post offices up and down the land.

Mr. Timms

In a moment I shall spell out to the hon. Gentleman the unprecedented scale of investment that is being made. Of course, turning the business around is a difficult job. Neglect is easy, and if turning the business around had been easy, no doubt even the previous Government would have done it. However, doing so is hard, so they did not do it. We have been willing to make the hard decisions that were needed. More importantly, we have been prepared to make the big investments that are needed. The result will be a far better service ahead.

To respond directly to the hon. Member for Orpington (Mr. Horam), over the decade from 1997 we will have invested more than £2 billion to modernise the post office network, and made more than £1 billion available to the letters business to implement its renewable plan, in order to return the company to sustainable profitability. It was the failure to invest in the previous 18 years or more that is at the root of the problems that we still see today.

Mr. Mark Field

There is one issue in respect of which the Minister cannot blame the past—the urban reinvention programme. He will have read in today's London Evening Standard that his own London Labour MPs—I note that none of them is on the Benches behind him—are complaining about the lack of transparency in the Government's urban reinvention programme, and about the fact that the figures have dripped out constituency by constituency, rather than giving the context throughout the capital. Does the Minister feel that urban reinvention is likely to work in London, and will he apologise for the lack of transparency that has vexed so many of his colleagues?

Mr. Timms

I will say a good deal about that programme in a few moments. However, in opening the debate, even the hon. Member for Lichfield acknowledged, a little grudgingly, that the exercise needs to be conducted because of the position that the business has got itself into.

There certainly problems for Royal Mail customers—no question about it—and they deserve a good deal better. Thanks to the determination of the management team that we brought in to turn the business around, and to the investment that we have been prepared to make, customers will get a much better deal in the future. Credit where credit is due: Royal Mail has held up its hands and acknowledged the problems. Allan Leighton and his team have given my right hon. Friend the Secretary of State and me a firm commitment to sort out the current quality of service problems. I am confident that the organisation will deliver on the commitment that has been made.

Mrs. Shephard

The Minister is extremely generous in giving way. He has spoken of the need to take tough decisions, so I wonder whether he will comment on the criteria that the Post Office uses when deciding which post offices to close, particularly in urban areas. In the most deprived ward in my constituency, the Post Office has decided to close a post office that serves a community of 4,000 people that is two miles from another post office, which has an irregular bus service, and of which one third are elderly or disabled. That community also has a large number of young mothers with one or more children. The problems are therefore perfectly clear for the people whom the closure would affect. When I discussed the criteria that had been applied to select, unerringly, the ward with the greatest difficulties, Post Office officials told me that there had to be a certain number of closures per constituency. Does the Minister agree with that criterion?

Mr. Timms

No, I most certainly do not. We have insisted that in the 10 per cent. most deprived urban wards, if there is no alternative post office within half a mile of the post office that is proposed for closure, it should not be closed. If the right hon. Lady wants to drop me a line about the case that she raised, I will be happy to consider it.

I want to address the concerns that have been raised about postal services, before going on to discuss the post office network. It is certainly the case that Royal Mail failed to meet quality of service performance targets last year. I have seen in my postbag the scale of the problems that have resulted and the anger that that has caused. In fact, in 2003–04 Royal Mail still delivered more than 90 per cent. of first-class letters the next day—the hon. Member for West Chelmsford (Mr Burns) was right to draw attention to this issue—despite the impact of industrial action. However, 90 per cent. is not good enough and the level ought to be a good deal higher, as he rightly said.

The picture is in fact varied. At lunchtime, I met a group from an organisation called North West in Business. A representative of one of the big accountancy firms told me that his company enjoys a superb postal service in its offices in Manchester and Liverpool, and that he does too, at his home on a farm in a rural area that receives van deliveries every day. He described the service as "superb". Elsewhere, however, that is not the case. The problem is a localised one. Royal Mail accepts that current performance is not good enough and is committed to putting things right. Agreement has been reached with the trade unions for a massive restructuring of the delivery and the transport systems, and everybody is working hard to get the service back to the levels that customers are right to demand.

Mr. Patrick McLoughlin (West Derbyshire) (Con)

The Minister has just referred to the role that the trade unions play in this issue. Does he agree that the role that the trade unions have played in the past has led to some of the Post Office's problems? If he does, has he had any talks with the Minister for Lifelong Learning, Further and Higher Education to ask him why he should not take the blame for them?

Mr. Timms

My right hon. Friend has taken a considerable interest in the Post Office in his former career and as a Minister. We need a much closer partnership between management and the trade unions, and I am pleased with the progress that we have made in the past few months. My noble Friend Lord Sawyer has played a helpful role in that respect, and there is now much more optimism about the future. That area is another that was scandalously neglected by the previous Government.

Allan Leighton was appointed as chairman to provide the leadership to turn the company around, and we have since made other changes to strengthen the board. We agreed a three-year renewal plan and we have put in place a financial package of more than £1 billion to support its implementation. That plan has just entered its final year. From the bleak position that the hon. Member for Lichfield mentioned, Royal Mail made an operating profit last year. That is impressive, but the turnaround to sustainable profitability is not yet complete. This final year is crucial as major changes are made to the way Royal Mail operates to remove inefficiencies and to tackle the quality of service problems that have arisen.

A key element of the restructuring is the move to a single delivery. That is by far the most visible change to the company's customers and its introduction has not been straightforward. It has involved a massive reorganisation, but we must recognise that the UK is the last place in the world to move to single delivery. Second delivery used to account for 4 per cent. of the mail but 20 per cent. of the cost. The change was essential if Royal Mail is to be viable and competitive in the modern postal market. Those figures make it clear that the financial case for retaining the second delivery simply could not be made.

Mr. Mark Field

While I appreciate what the Minister says about the financial viability of a second delivery, surely he must realise that Royal Mail no longer has a meaningful monopoly, what with electronic mail and the other new ways of communicating? Will he talk to his friends in the trade unions or with Royal Mail to ensure that some long-term vision is implemented? The organisation needs leadership, because that is what has been lacking so visibly. All consumers of Royal Mail services now have a wide range of communication options, and they can say, "Enough is enough, whether we have one, two, three or four deliveries." E-mail, for example, provides multiple opportunities with umpteen different daily deliveries, and it is a direct competitor to the Royal Mail.

Mr. Timms

Leadership is precisely what Allan Leighton and his team have provided. The hon. Gentleman is right to say that the market is increasingly competitive and it will be even more so in the future. That is why it has been so important for the organisation to turn around as it is now doing.

Each day, Royal Mail delivers more than 82 million items to up to 27 million addresses. The amount of mail for daily delivery every day is equivalent to the highest Christmas peak of 30 years ago, so we have not seen a decline in overall volumes. The number of addresses to which deliveries must be made has also increased significantly. Change is unavoidable and the competitive market is one of the reasons.

A consequence of the change to single deliveries is that postmen and women will be delivering for longer, which means a later start on some routes in order to sort mail for delivery and put it into route order. The aim is to deliver to the majority of customers by lunchtime and for all rural deliveries to be completed by 3 pm.

Mr. Burns

Will the Minister give way?

Mr. Timms

I want to make a little more progress before I give way again.

The whole House will realise that change had to be made. For the most part, the change has gone reasonably smoothly and in most places things are now working well. In some places, however, there have been serious problems and my right hon. Friend the Secretary of State for Trade and Industry has been given Allan Leighton's personal assurance that those problems will be vigorously tackled, while the single delivery is being introduced, and that solutions will be found. Adam Crozier has taken personal responsibility for improving the company's performance and I shall be watching out to ensure that the problems are solved and that performance is restored to at least the level achieved last year, when there was next-day delivery of 93 per cent. of first-class letters.

The post office network has been the subject of numerous debates in the House, with a further one today, reflecting the immense interest of all Members in the post offices in their area. Under the previous Government, the background was familiar: a failure to invest, resulting in inexorable decline—a decline that we have been determined to reverse.

We brought in a new management team, led by David Mills as chief executive of Post Office Ltd. He has a successful background in banking and has been doing a superb job since his appointment. We have invested in the network; £500 million to computerise and connect every post office branch, which is one of the biggest IT projects ever undertaken in the UK and an unqualified success.

We have encouraged the introduction of new products and services, taking advantage of the fact that IT allows electronic banking to be offered at every sub-post office in the country. We have recognised that the number of post offices in urban areas needs to be reduced to reflect the fact that fewer people are using them and so that the business has a viable future serving all our urban communities as well as our rural areas.

Malcolm Bruce (Gordon) (LD)

Will the Minister address the particular problems in Scotland, where the Scottish banks have not co-operated with the Post Office? There is a rundown of services and a switch away from benefit payments at post offices, but the option of receiving payment through a bank account will not be available in Scottish post offices. Does he have a separate plan for Scotland? In Aberdeen, where the Post Office wants to close 15 branches, when the city asked for discussions with the Post Office about council tax payments being made through local post office branches, the Post Office was not even prepared to discuss it. Can the Minister explain that?

Mr. Timms

On the hon. Gentleman's first point, every high street bank, including those in Scotland, is now offering basic bank accounts, which can be accessed at every post office branch, including those in Scotland. Secondly, there have been some encouraging discussions—several of my hon. Friends who represent Scottish constituencies have taken part in them—with at least one of the Scottish banks, which suggests that we may see some progress on that front. I agree that it is important for Scottish post office customers that we encourage the banks to consider opening up their accounts to access at post office branches, as we have seen on the part of Lloyds, Barclays and Alliance and Leicester in England and Wales.

The programme that commenced at the end of 2002 is difficult and is causing inconvenience, but it is absolutely necessary to maintain an urban post office network with reasonable access for customers in every urban area. With about 16,000 branches, the network still has more branches than all the high street banks and building societies put together. Before the programme started there were more than 1,000 urban offices with more than 10 others within a mile. There is no longer sufficient business to sustain so dense a network, and to his credit, the hon. Member for Lichfield has accepted that.

Mr. Weir

I notice that the Government's amendment to the motion reiterates their view that no one should be more than a mile from a post office. Although the latest letter that I have received from the Post Office about branch closures mentions that in passing, it also states: It may be helpful to explain the access criteria agreed with Postcomm, the postal regulator, that 95 per cent. of people in the UK will have a Post Office branch within 5 km (3 miles) of where they live. Can the Minister explain which figure is correct? Is there to be a post office within one mile or within three miles? If it is to be three miles, most medium-sized towns could be served by one office in the centre.

Mr. Timms

At the end of the urban reinvention programme, at least 95 per cent. of residents in urban areas should live within 1 mile of their nearest post office. That clear criterion has been laid down for the whole programme. The alternative to the managed restructuring that is under way would be an unmanaged, unplanned contraction of the network, with ad hoc closures leaving a very uneven geographical spread of offices and some art as losing all access to post office services. The managed programme to reduce overprovision—difficult though it undoubtedly has been—is far preferable to the alternative of uncoordinated closures resulting from falling income.

I do not agree with the hon. Member for Lichfield in suggesting that the compensation available has been excessive. A standard formula, based on 28 months' income, has been negotiated with the National Federation of Sub-Postmasters. The 28-month figure for the value of a post office business is of long standing and well understood. We are effectively saying that the compensation is roughly equivalent to what sub-postmasters could have expected if they sold their businesses two, three or four years ago, before the changes of the past few years. That is fair. It is entirely reasonable that people should receive a decent price for their businesses—in many cases, after giving years of valuable service to their local communities. His remarks about excessive payments will cause great offence to the National Federation of Sub-Postmasters and its members.

Michael Fabricant

I am not commenting on the size of the thing—28 months may well be appropriate—and I certainly do not suggest that it should be decreased, but does the Minister not accept that Postwatch says that the closures have been patchy? Where closures have taken place, the distance between consumers in an urban area and the next post office can be more than a mile, and where the distance is less than a mile, sometimes—we gather from our correspondence that this happens more than sometimes—major obstacles, such as hills or major roads, prevent vulnerable people in our communities from getting to those post offices. Should those issues not be taken into account?

Mr. Timms

Those issues certainly should be taken account of, and they are being taken account of. The chairman of Postwatch has told me that the consultation process has improved significantly following my statement on 5 February, and that the process itself works well. That is not to say that there will not be closures that cause inconvenience to significant numbers of customers. I hope that the hon. Gentleman will recognise that the reality is that it is not possible to close a large number of offices in the way that we have to without causing inconvenience to some, but the issues that he raises are precisely those that are taken account of in the consultation exercise.

Mr. A. J. Beith (Berwick-upon-Tweed)

The Minister will remember that, on 26 February, he replied to an Adjournment debate about the closure not of a sub-post office, but of a main Crown post office. Surely it is not part of any planned programme that there should still be no main Crown post office in Berwick nearly a year after the original closure? Although there is talk of a franchisee being found, does not that reveal that the Post Office should have a fall-back plan for such circumstances?

Mr. Timms

The right hon. Gentleman did indeed raise his concerns about that case in a debate with me some time ago. I am disappointed to hear that the case has not been resolved as yet, but he will acknowledge that it is not through want of trying on the part of the Post Office. A rather different category of case is involved from those being considered under the urban reinvention programme, but I will certainly find out from my officials what the latest developments on that branch are.

Mr. McLoughlin

Will the Minister give way?

Mr. Timms

No. I need to make some progress.

The hon. Member for Lichfield surprised the House by drawing attention to issues in Leicester, South. Post Office Ltd. has not yet reached a decision on the proposal to close the Knighton Church road, or south Knighton, branch. The company is giving the proposal further consideration in view of issues that have been raised during the consultation by the community and Postwatch. The programme is not about only closures. The plan for the area includes the proposal to relocate a branch at Park Vale to a nearby convenience store to offer improved facilities for customers. If the proposals for Leicester, South go ahead, there will be £150,000 of improvements to the remaining branches in the area that will receive additional custom as a result of the closures. The previous Government did not undertake such investment, but it is now, thank goodness, coming into place.

Mr. McLoughlin

Will the Minister give way?

Mr. Timms

No, I need to make some progress.

The network has been in decline for some years, and the programme will help to restore the confidence of sub-postmasters in their future prospects, while reducing the level of over-provision and leaving a viable network. That job had to be done, and the process has been given strong support by the National Federation of Sub-Postmasters. The increase in the business of the remaining offices, backed up in many cases by funding from the £30 million that we have made available for investment grants, will go a long way towards ensuring that the sub-postmasters who run them may have confidence in their prospects. That is vital for the future viability of the urban network as a whole.

The £2 billion funding that we have made available since 1999 was the first money provided by any Government for the urban post office network. Such action was in stark contrast to the behaviour of the previous Government, who starved the Post Office of the investment that it needed. Some 20 million existing current account holders can now use banking services at every post office in the country. Universal banking services provide customers with free access to their basic bank accounts at post offices, and I am glad to say that there is a substantial growth in the number of those accounts that are being used.

We have encouraged the introduction of a range of new products, the first of which was personal loans, which were made available at every post office in the country. The Post Office successfully provides travel insurance and is now the country's leading supplier of foreign currency exchange, which is a successful development.

On Friday, I visited the Crown post office in my constituency of East Ham and met the new manager, Mrs. Jay Shri Patel. She gave me its trading figures, which every member of its staff now has the chance to see. The branch is not yet profitable, but there is much optimism that it will be as a result of the changes that are being made. Last year, its income from banking increased by 2.5 per cent., but so far this year that has increased by 19 per cent., compared with the same period last year. Its income from travel services has increased by even more than that, which has offset the loss of income from its benefit business. The new car insurance product has a great deal of promise. That is the picture that we want to see throughout the network in the future. The National Federation of Sub-Postmasters, Postwatch and Post Office Ltd.—three organisations with different perspectives—have all agreed that the programme is essential if we are to avoid the alternative of unmanaged decline, and hon. Members also recognise that hard reality.

Mr. McLoughlin

I have raised with the Minister on many occasions the closure of four of the five post offices in Belper. Does he think that that policy has lived up to the undertaking in the Labour party's manifesto at the last election, which read: There will be increased incentives for people to take over and modernise post offices"? If there were five post offices, but there is now one, where is the increased incentive?

Mr. Timms

There are greater incentives for people to do exactly that, which is the purpose of the £30 million fund that sits alongside the funding agreed by the House in October 2002 to allow the programme to go ahead. We are experimenting with new ways of delivering post office services in rural areas. Above all, the incentive that people need to invest in the post office network is the prospect of a secure business future, so the process of rationalisation through which we are going is an indispensable contribution towards bringing that about.

Keith Vaz (Leicester, East) (Lab)

I appreciate all the effort and work that my hon. Friend has put into the issue, but it remains the case that local people feel that they are not being listened to by those at Royal Mail. As he knows, there have been more than 10 post office closures in Leicester, although we are delighted that Clarendon Park post office has been given a reprieve. I am very grateful to the Minister for that, even though it is not in my constituency. The fact remains, however, that if people had confidence in the consultation process, the proper points that he is making would be understood by the public.

Mr. Timms

That is why I have made sure that Postwatch has played a key role from the beginning, and is able to examine each and every proposal and to monitor the programme as a whole.

Mr. Burns

Will the Minister give way?

Mr. Timms

No, not at the moment.

There have been more than 1,200 closures since the start of the programme following the vote by Parliament to provide funding. In more than 50 cases around the country where Postwatch has become convinced that a proposal should not go ahead, the decision has been reversed following public consultation. What my hon. Friend is rightly calling for is indeed what has happened. In addition, 57 proposals were withdrawn in the light of Postwatch's preliminary views and comments before the public consultation stage. About 200 proposals have been amended as a result of issues raised during consultation.

Research carried out separately by Post Office Ltd. and Postwatch shows that nine out of 10 customers of branches that have closed under the programme have moved their custom to offices that the company predicted would benefit from additional custom as a result of a nearby closure. That is clear evidence that customers are continuing to use post offices and that the programme is achieving its objectives, boosting the businesses of the branches that remain.

Of course the programme was always going to be controversial, but the vast majority of closures have been accepted as necessary and have attracted little criticism. Following concerns expressed in this House and elsewhere about the consultation, I asked Post Office Ltd. and Postwatch to review the arrangements and to propose changes to make them work better. I subsequently announced a number of changes in a statement on 5 February, and I am pleased that the process has worked much better since then.

Mr. Burns

I do not know whether the Minister has been involved in any part of the consultation process in his capacity as a constituency MP, but I have to tell him that, regardless of the figures that he cites, the hon. Member for Leicester, East (Keith Vaz) is right. Seven urban sub-post offices have been closed in the past 15 months in Cholmsford, and to be frank, the consultation process was a farce. The Post Office was utterly courteous in its dealings with those united in opposition to the closures, but it did not pay one iota of notice to the representations and just rammed through the closures.

Mr. Timms

As I have said, Postwatch has been able to take an independent view of each proposal, and where it has concluded that a proposal should not go ahead, the matter has been taken to the Post Office, an escalation procedure has been put in place, which I think has worked well, and as a result there have been a significant number of changes to proposals around the country. That is how, the exercise should work.

Mr. Jim Cunningham (Coventry, South) (Lab)

First, the initial consultation was all right until what was to be closed and not to be closed was published, and then it became very difficult to have any further meetings or discussions with the Post Office. I accept what my hon. Friend says about Postwatch. Secondly, many people have volunteered to take redundancy, for want of a better term, but there has been a problem finding others to take over the service where it might be needed. That is one of the problems that we have encountered in Coventry.

Mr. Timms

The intention behind—indeed, the justification for—paying compensation is to enable a branch to close, thereby supporting the viability of other branches in the area. My hon. Friend is right; one problem has been finding people to run the offices on the basis of the business as it was. That is one reason why we have had to make the changes—reducing the overall number of branches in urban areas and so making the businesses more attractive propositions for the future.

Local post offices also have particular importance to those living in rural areas. The network of post offices serving those communities is especially important to maintaining local access to essential services for those who are less mobile than others. That is why we have taken steps to protect rural post offices. In October 2000, we placed on Post Office Ltd. a formal obligation to maintain the rural network and prevent all avoidable closures of rural post offices, in the first instance, until April 2006. Post Office Ltd. appointed a network of 31 rural transfer advisers, who often become closely involved with community efforts to reopen or save rural branches. They have had considerable success in finding alternative sub-postmasters to replace those who have left, locating suitable replacement premises where necessary, and encouraging community efforts to provide services to the local community.

We have made £450 million available for Post Office Ltd. to maintain the rural network and prevent avoidable closures until at least April 2006, thus helping to ensure that reasonable access is maintained for all citizens to over-the-counter services in rural areas. To pick up the point made by the hon. Member for Lichfield, we will make decisions on future support for the rural post office network beyond 2006 in good time to allow for a smooth transition from the current arrangements. We are considering the options at the moment, and will make an announcement in good time. We want to minimise any uncertainty, both for sub-postmasters and for people in rural communities, and to take account of lessons from the pilots that are under way.

Direct payment of benefits provides a modern, secure, efficient system that is cheaper to administer. It is not new for benefits to be paid into an account—indeed, it is increasingly the norm. Before the decision by the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Gravesham (Mr. Pond), and his colleagues in the Department for Work and Pensions to switch to making all payments by direct credit, more than 43 per cent. of benefit recipients already had payments made directly into their bank accounts, an increase from just over 25 per cent in 1997, when a dramatic change in people's behaviour began. Nobody should be surprised that more and more people want to use bank accounts. For example, 93 per cent of all new child benefit recipients and more than 90 per cent of newly retired pensioners choose to have their benefit paid directly into their account. The old order book system is out of date, as it is based on ration book technology. It is inefficient, open to fraud and abuse, and expensive to administer. It must be modernised to keep in step with changing customer needs and to reflect the fact that owning and using a bank account is now the norm. Over 87 per cent. of benefit recipients and 91 per cent. of pensioners already have access to a bank account.

Mr. O'Neill

A great argument for the new system is that it will reduce the number of fraudulent claims and the loss and theft of benefit books, but how low are the figures, assuming that take-up is a wee bit higher than currently projected? We have heard the costs of the existing system, but what are the costs and, by definition, the savings of the new one? I do not believe that that has ever been put on the record before.

Mr. Timms

We certainly expect significant reductions, and I will ask the Under-Secretary of State, my hon. Friend the Member for Gravesham, to respond to that point in his winding-up speech.

The changes, of course, will result in other benefits. Citizens Advice recently published a booklet on financial inclusion, in which it said: The government, the banking industry and the Post Office should be commended for the progress they have made in establishing Universal Banking Services. The ambition to enable all people to own the most basic of financial services—a bank account—is one we share. Citizens Advice is right to celebrate direct payment as a method of financial inclusion—a goal that we all share. Post offices should be attractive places that offer services that people want to use and to which they want to return, not places that people are forced to use because they have no alternative. We share that vision with the Post Office, and increasingly it is being realised in practice.

I conclude by taking the opportunity to praise the men and women who work in the Royal Mail. They have been much maligned by the media in recent months. The truth is that the vast majority of Royal Mail staff do a superb job with real dedication. They are honest and hardworking and they take pride in the work they do. They are a vital part of the fabric of our communities in rural and urban areas.

The reforms of the services that we have introduced—greater commercial freedom for Royal Mail, independent regulation and a stronger consumer body—are providing the right framework for a modern, competitive postal market. It will maintain the universal postal service and give consumers more choice. It gives Royal Mail the opportunity to compete with confidence in an increasingly dynamic market. There have been problems. They can be overcome and they will be. We have given a clear message to Royal Mail and its trade unions that they must work together to restore public confidence urgently.

As regards the post office network, we will continue to work with the company as it faces up to the challenges of changing demands from customers and society. I am certain that the organisation can look forward to a future much brighter than the experience of the past few months, and its customers can do so as well. I call upon the House to support the Government amendment.

4.51 pm

Malcolm Bruce (Gordon) (LD)

I commend the Minister for the energy and enthusiasm with which he responded to the debate. He must almost believe everything he said, and believe that he could persuade the House. If the picture were as rosy as he describes, people would be clamouring to open post offices, rather than snatching the money to close them as fast as they can. That is the reality. Nobody wants to open a post office in the present circumstances. We have a long way to go before we can achieve even an equilibrium and a confidence in the future of the post office network that will encourage people to retain or move into the business. That is what concerns many of us.

I shall deal first with issues relating to the Royal Mail service. It is true that the letters service has come back into profit in the past year, which is welcome. The loss in the previous year was partly due to the fact that in spite of the Royal Mail's application for a postal increase, it was denied for more than a year and the company lost £1 billion of revenue. Although Royal Mail should properly justify increases and ensure that it maintains efficiency, when costs have genuinely risen and the revenue is not allowed to rise, that clearly drives the organisation into loss. As a consequence of that, many of the savings come from reductions in service, rather than from the investment about which the Minister boasts.

I accept that it is difficult to defend the long-term future of the second delivery, given the disparity between costs and customers. Most of us could be persuaded to accept that if we were confident that the standard of the first or only delivery was rising, rather than falling. Royal Mail has difficulty in creating confidence because it has only bad news to tell.

Michael Fabricant

The hon. Gentleman will recall that the Minister said that many other countries have only one delivery. Is it not the case that that one delivery is usually before 10 am and is reliable and predictable, whereas the Government are speaking of deliveries right up to 1 pm or 2 pm, and those deliveries are decidedly unreliable?

Malcolm Bruce

That is a point to bear in mind. Those of us who visit post offices, as we all do at various times of the year, have some sympathy with people who have to come in at 4.30 am, 5 am or earlier to sort and deliver the mail. I can see the difficulties in making them come in at 2 am. That is where investment is required to increase mechanised sorting, so that the whole process can be completed early enough to achieve an acceptable delivery time.

This week, for example, I received representations from a company that has made representations to me before that its delivery has slipped back two or three hours. When a company complains, the Post Office endeavours to accommodate it by shifting the delivery around. That means that someone else's delivery is put back and, when they complain, the original schedule is reinstated. Until the whole delivery system is brought forward, the problem will not be solved; it will merely be moved about.

A new development that has not been mentioned slightly puzzled me, and it is rather important. Last week, my local postie arrived and asked whether I liked his new transport. He said, "I've become white van man." He had parked a hire van outside my front door. I asked what had happened—I assumed that he had accidentally put his vehicle off the road. He said, "No, it is new policy in the Post Office not to own the fleet, but to contract it out and reduce its size."

That is a serious point. If hired vans of any hue can go around masquerading as Post Office vans, it will have an effect not only on image, but on confidence. When people see the little red van coming up their drive, they know and have confidence that it is their local postie. Allowing some anonymous white van to deliver the mail clearly opens up the possibility for fraud, misrepresentation and lack of confidence. If there is a serious cost saving to be made, as I am assured there is at a local level, we should know the ramifications. This is not just a matter of diluting an image; it has serious further implications. I would be interested to know whether there is an answer and explanation at a policy level.

Another service that I think many of us use personally, but which is also used commercially, is the household delivery service, whereby postal deliverers will deliver unaddressed mail along with addressed mail. That service is used by supermarkets, commercial operators and, believe it or not, by political parties to get their message through people's doors. It is increasingly difficult, however, to negotiate with the Post Office in order to transact such business, which must be bad for both the commercial and the public service operators that want to do so.

My experience is that it is impossible to get a firm cost, time or schedule. Indeed, the clear indications are that the Post Office does not want such business, which is regarded as a nuisance. Private companies are moving into the field, charging more and not necessarily giving as good a service. Again, no rational explanation has been given. It seemed to us that the service was a good one, and that it was good for the Post Office to ride on the back of the fact that it was delivering to households anyway. It is not clear whether the Post Office has decided that such business is not profitable, that it does not want it and that it is prepared to leave it to private operators—if that is so, it would be better if it were open about it—or whether, as has been suggested to me, some other constraint is preventing it from expanding what should be a profitable add-on business that supports the rural network.

Mr. Russell Brown (Dumfries) (Lab)

Could it be that there is so much business of that sort and the demand is so great that the Post Office has to turn some of it away? That might be why it is not quick to respond. Like many other businesses. if it is inundated with work it will be slow to respond, thereby putting off a potential customer.

Malcolm Bruce

That may be true, but my experience—I have also talked to one or two colleagues—is that we do not get a constructive relationship in which the Post Office says, "If you bid for this, you can have it" or "We can't do it." Instead, we get a lack of response, firm dates and clear guidance, which is poor management. it seems to me.

I do not know what such business represents for the Post Office, but it is going the right way about losing it. It is clear that other organisations think that it is worth stepping into that business and taking it away. As a customer, my local party—this point is relevant to everybody who uses such services—is now contracting privately, not out of choice, but because we cannot contract with the Post Office. That is unfortunate. I do not know whether there is an answer, but it would be appropriate for Royal Mail to explain why it regards such business as marginal or of limited interest. If such business is development business, it would be interesting to know why the Post Office is not developing it more efficiently and in a more organised way.

A poor delivery service, the phasing out of the second delivery and a growth in competition are creating a worry about Royal Mail's future. When one speaks to it, it says that the most serious competition that it faces comes from the Dutch and the Germans. Most of its business is business-to-business business of the sort that is not based on delivering granny's post card. Businesses simply want guaranteed delivery on a large scale. They do not mind who does it, but they want reliability at a competitive price.

If Royal Mail does not respond soon, it will find when it has put its house in order that a lot of the business has already gone elsewhere. That is a matter of concern. Indeed, Royal Mail's capacity to maintain a universal service would start to be called into question if it were to lose too much of its business to competitors. I do not share the Minister's confidence that the management can deal with that competitive threat.

For most members of the public, concern about the mail pales into insignificance compared with the future of their local post office and post office services. Perfectly rightly, the Minister said that the culture has changed, and that people prefer to have payments made into their banks and no longer want cash from the local post office in the same numbers. None of us denies that point, and we all recognise that we must respond to it. However, many people, including those with bank accounts, want to use their local post office, whether to obtain cash, make payments or use other services. They want to know that such services will exist in the future, but that is not currently the case.

I am slightly surprised that the Conservatives chose to debate this topic, because 3,344 post offices closed between 1981 and 1997 under the Conservative Government—2,543 post offices have closed since 1997 under the Labour Government. My concern is that few more than 14,000 post offices, half of which will still lose money, will be left at the end of the current process. Postwatch says that 250 post offices that closed in recent times should not have done so given their locations and the need for them, but such decisions cannot be revisited in order to reopen post offices.

One of the most difficult tasks for any MP is to persuade the Post Office to open a new post office, even after a major population change occurs. During my 21 years in Parliament, I have succeeded precisely twice, and the second opening caused the Post Office promptly to close another post office in the same town, so my campaigning had a marginal effect.

The Government have not made it clear what will happen in the future. If the branch network were reduced to 14,000 offices, half of which would lose money, what aspect of the business plan leads the Minister to believe that enough business, whether public or private, exists to secure a viable, long-term future? His assurance that the network will be stable at the end of the organised programme is belied by the fact that post office closures will continue once the programme is completed—they will continue haphazardly as people retire or decide to give up because they are not making money.

Michael Fabricant

Although the Minister assured us that the transition, which will occur from April 2006, to supporting rural post offices will be smooth, until an announcement is made—I noted that he was unable to make an announcement today, despite his being asked to do so—uncertainty will continue to exist, which makes people unwilling to open rural post offices.

Malcolm Bruce

The hon. Gentleman is right. I suspect that we must wait until closer to an election—perhaps a rural by-election—for an announcement, and I confidently expect such an announcement before the next election.

The hon. Gentleman's serious point is that an announcement is needed, but an announcement will not solve the rural network's problem, although it will extend the uncertainty. This is not an argument for withdrawing money from post offices, but both rural and urban post offices want to know about guaranteed public business, access to services such as vehicle licensing and passports, and how long it will take for the private business that the Post Office is bringing on stream to provide viable business plans for individual post offices that make them worth investing in and that give them long-term futures.

No one whom I have met in the post office business is confident. When I talk to postmasters and postmistresses, they say that they are hanging in until they retire, until they are told to go or until something happens, and not that they really want to be in the business.

Mr. Weir

I am interested in the hon. Gentleman's comments and broadly agree with them. Like me, he represents a constituency that is partly rural and partly urban. Does he agree that sub-postmasters are trapped in a vicious circle because they do not know the future of the business but are having to go through the reinvention programme in urban areas, which is closing post offices? Does he further agree that in the absence of an overall view, our constituencies' postal provision tends to be haphazard or lopsided?

Malcolm Bruce

That is exactly right. I do not want to identify individual post offices, but I can say that in the past couple of weeks I have spoken to owners in my area and in Leicester. One said, in effect, "I'm just taking the money because it's on offer." Another said, "I don't want to talk about it because I know that the community is not happy and I'm a bit embarrassed." I said, "You shouldn't be embarrassed, because you're looking after your own interests, which is understandable." However, they still would not discuss it.

Another owner said, "A year ago, the Post Office asked me to take voluntary closure, and I decided against it because I was happy to carry on with the business even at that level." She told me that her office was then designated a compulsory closure under the Aberdeen closure programme. She asked me not to fight for it, saying, "If you succeed, given the state of the business now I'll have to close it in six or nine months' time anyway because there will be no business left, and there is no virtue in hanging on to a business that is not viable." However, it was viable 12 months ago. A particular difficulty is that 150 child benefit element payments have been reduced to four. She told me, "I don't just lose the payments. When people came into the shop they bought sweets, newspapers and other things; now, they don't come into the shop at all. We've lost the footprint—as has the Post Office, because people are going to other businesses for banking services." Where can the Post Office get that business from once it has lost it? That is a serious point of concern.

The Post Office's management have ambitious plans. They are bullish about what they can do, and I wish them nothing but joy and success. However, they are moving into a highly competitive area of business where other companies are involved, and we have yet to see how successful they can be. Because of underinvestment, they are having to develop in partnership with private collaborators. Although there is nothing wrong with that in principle, the fact that they have to share the profits to get access to investment reduces the value of the potential benefits involved. In that context, we must recognise that we do not yet have a business plan that delivers results.

Several hon. Members have been to Leicester, South because of the by-election. When I visited that constituency as my party's spokesman on post offices, I was told that four post offices are threatened with closure—three under the urban renewal programme and one because it is under review. Massive petitions are being signed in the community. People said, "We can assure you that we are using these post offices— sometimes they bulge at the seams and you can't get near the counter because there are so many people coming and going—but we are told the service is no longer required." When I asked them how they felt, they said, "We feel utterly confused, to be honest. These are busy post offices and we use them, but the Post Office, the Government or whoever say they are not necessary." I assure the Minister that that will register when people vote, because they do not understand why it is happening and can see no benefit.

Another issue is that of the activities of supermarkets that have taken over post offices. It is mentioned in the amendment tabled in my name and that of my hon. Friends. The Post Office contracted for a number of supermarkets to operate post offices in their premises. It seemed like a good idea at the time, but now they tend to say that they can make more money selling beans and would rather not have the post offices. That creates further problems. My information shows that Tesco notified the Post Office of 44 closures after the recent takeover and that Morrisons gave notice of 21 after its takeover of Safeway. That presents genuine difficulties because alternative premises and venues may not be available. The Post Office and the Government have lost control, which was effectively surrendered when the branches were given to the supermarkets. Now that the supermarkets no longer want the branches, there is a huge problem. Who will pay for finding alternative premises? Will the cost be so high that the community will lose the post offices?

Mr. John Lyons (Strathkelvin and Bearsden) (Lab)

The hon. Gentleman makes an important point about Safeway, which has been taken over by Morrisons. Post office closures, which were never threatened under any programme, are now taking place effectively as part of Morrisons' policy. That is happening in my constituency.

Malcolm Bruce

The hon. Gentleman makes a good point. If the Post Office's presumption was that a post office was needed in a locality, it should go through a process that is different from simply asking, "Is someone available who is prepared to take it over?" There should be positive action, with some investment if necessary, to replace the post office in a suitable nearby location. I hope that the Minister will deal with that point.

Mr. Russell Brown

I agree with the hon. Gentleman and I know fine well that it appears that Safeway in Dumfries will lose its post office. However, does not that provide a God-given opportunity in Dumfries for the business to be redistributed among the three, possibly four, other sub-post offices within three quarters of a mile of the supermarket site, thereby strengthening their position?

Malcolm Bruce

The hon. Gentleman knows his constituency and his suggestion may be the right answer for it. The decision must be based on local circumstances. If the community accepts it, that is fine. However, I am worried that we are closing so many post offices and it is simply assumed that the business will transfer to neighbouring ones, but that will not happen to all of it. In some cases, the long-term business does not exist, so further closures may be in the offing.

Mr. Timms

The hon. Gentleman is making an important point and I am sure that he, like me, welcomes the assurances from Tesco and Morrisons that they will work closely with Post Office Ltd. when they review their stores that currently accommodate post offices. They will not act precipitately. Only Post Office Ltd. can make a proposal for the permanent removal of a post office. Tesco, Morrisons or any other body cannot make such a proposal; there must be a consultation period in accordance with the code of conduct. I believe that we can work through the issues to which the hon. Gentleman rightly draws attention.

Malcolm Bruce

I hope that that is the case. Unsurprisingly, Tesco has asked to see me tomorrow and perhaps I shall get some further information. I do not make an attack on Tesco and Morrisons; I simply draw attention to a problem that should be properly tackled, not realised by default.

I am conscious of the time, but I want briefly to refer to Aberdeen, where the situation has given me cause for concern. I wish to make it clear that the city of Aberdeen is not part of my constituency, but one of the sub-post offices, Bankhead, was in the Gordon constituency before the previous boundary changes and should be in that constituency after the next boundary changes. However, that will not happen because it will be closed. There are 14 other post offices in the city of Aberdeen, and I made a point about that in an intervention, to which the Minister did not respond.

There was a change of administration in the city council last May, when the Liberal Democrats formed an administration with Conservative support. It approached the Post Office early to discuss the possibility of paying council tax through local branches. The Post Office was not prepared even to discuss it, despite the council's indicating that it expected a budget transfer of £100,000 to the small post offices. That is a disturbing attitude by the Post Office. It claims that it is trying to develop business, but when business is on offer it is not even willing lo discuss the possibilities.

The same applies to utility payments and other matters for which the Post Office claims to have an ideal network. I was discussing with a credit card company, which I shall not name, its attitude towards its relationship with the Post Office, and it said, "To us, the Post Office's unique selling point in getting us to use its services is that it has a major network, but it is in the process of destroying it, so why should we bother to engage with it?" That is a serious response from a serious business, and if the Minister does not take it seriously, he is really not in touch with what is happening.

The post office network has to settle at a viable size that people will be convinced will stay viable. In spite of Ministers' assurances people working in the Post Office do not believe that that will be the outcome of the current processes. I think that the Minister is genuine in his belief, and honestly confident that business will come, but many people engaged in the process cannot see it coming through at anything like the speed or volume necessary to sustain the network that we will have by, say, the middle of next year.

I have mentioned my concern about the situation in Scotland. One of the arguments that has been put to me is that part of the revenue stream w ill come from people carrying out cash transactions on their own bank account through the Post Office. In Scotland, the Royal Bank of Scotland and the Bank of Scotland have refused to co-operate with that scheme, which affects the vast majority of account holders in Scotland. The only other bank of any significance is the Clydesdale bank, which might be having discussions about it—

Mr. O'Neill

The TSB?

Malcolm Bruce

Well, the TSB is important, I agree, but the hon. Gentleman knows perfectly well that the Bank of Scotland and the Royal Bank of Scotland play a considerable part, and that, because of the decisions made by those banks, Scottish post offices will be significantly disadvantaged in regard to revenue potential, compared with those in England, yet there is no plan to offset or compensate them for that.

The contention that my colleagues and I are making is that change is necessary and desirable. However, a lot of what the Government call investment is actually dead money being paid to shrink the network. In reality, the Post Office needs investment to develop new services, and Royal Mail needs investment to compete with the private sector. The Government's business plan does not inspire confidence that either of those two wings of the post office network will be able to make the investment needed, on the scale required and in the time scale that we face, to deliver a viable, profitable future. In those circumstances, the question will continue to be asked as to whether the Government really are in control of Royal Mail and the Post Office.

5.17 pm

Mr. Martin O'Neill (Ochil) (Lab)

When I got back last night from a foreign trip with the Trade and Industry Committee and read my Whip, I saw that today's debate was to be on postal services, so I thought that we would be discussing the delivery of letters. However, such is the understandable ambition of a frustrated Opposition Front Bencher that a scattergun approach has been adopted and everything is the subject of attack. I suppose I shall have to revise my notes a little as a result.

I want to start by discussing the Royal Mail. I welcome a debate on this subject, because it is probably an appropriate time to have a discussion in the House on this issue. The Royal Mail has had a chequered experience in recent months—I use the term "months" rather than "years". Last September, a vote was taken on a strike and, to my surprise, it was won by the management. I had thought that other factors were at work and that the workers would come out.

I recognise that neither the Post Office nor the postal service is a monolith. It is unfortunate that the hon. Member for Lichfield (Michael Fabricant) either has not read or does not know the work of Tom Sawyer and his consultancy, which introduced some seminal changes into the thinking on industrial relations on both the employer and the trade union side. His analysis of the situation bears repetition today. He identified a number of groups employed in the Post Office. First there were the people who had been there for many years and who were Royal Mail loyalists. They in turn could be split into two camps. The first consisted of those who were prepared to work for what is really a pittance. If there was a cause for dispute at the time of the ballot, it was the fact that all the people who deliver our mail every day get less than £300 a week. If anyone is telling me that people should get paid less than 15 grand a year for doing work of that nature, that is a disgrace. We cannot run a high-quality service on low-paid workers.

A number of people formed their view on the basis that they had been at the Post Office a long time. I do not have the exact figures and they vary across the country, but in my constituency a job with Royal Mail, as it is now called, is perceived as a good job. It is regular employment and it has an index-linked pension at the end of it. A number of people who entered into that ballot took the view, "We don't get very well paid, but we're getting near retirement so we don't want to rock the boat and we certainly want to retain an index-linked pension." It is to the credit of the management that they expressed in the evidence that they gave to us recently a continuing commitment to the index-linked pension, which has to be there as a reward for people who for too long have been too lowly paid.

Historically, some people who joined the Post Office came from the services. One problem that we have had with the Post Office, which was identified by Sawyer, is the fact that the management structure has, on occasion, been militaristic, multi-layered and authoritarian. It has not been conducive to changes in working practices—which takes us on to the second group. These people may not like the pay and may be more recalcitrant, but they nevertheless have a loyalty to the concept of public service as expressed in the delivery of mail. They were, in large measure, the ones who were fed up and last year voted for strike action. However, the negative vote meant that it did not take place. None the less, some of those people took strike action.

There is a third element, which is most pronounced in the big cities—the people who are part of the churn. They work at Royal Mail for a relatively short period and, frankly, are not interested in the long game. They are certainly not the kind of people who by and large want to go out on strike, because they are happy to take what they can get for as long as they need it and then move on to another job. Some have been unemployed while others have left a job to go to Royal Mail. They see it as a pathway to other areas of employment.

So the labour force are not monolithic, but the people who work at Royal Mail are highly committed to a concept of service. One management shortcoming was that, before the ballot, they were unable to sell the changes in work practices. It is fair to say that the person who has fought hardest for the single delivery is the general secretary of the union, Billy Hayes. Billy has argued consistently that a system that accounts for 4 per cent. of the mail but, as the Minister said, 20 per cent. of the costs is an unreasonable burden to place on his members.

I merely ask whether anyone on the Opposition Benches—their numbers are more depleted than once they were, although I realise that the shadow Minister, the hon. Member for Lichfield, had a captive audience; they were agog at his oratory while mere mortals such as me have to put up with a far lower turnout—is prepared to defend a system that accounts for such a large part of the costs while being responsible for such a small part of the delivery.

Michael Fabricant

I am bitterly disappointed that, despite my oratory, the Chairman of the Trade and Industry Committee cannot remember what I said. I made it very clear that we think there should be only one delivery, for all the reasons to which he has already referred. Does he not accept the point made by Conservative Members—and, indeed, by Labour Members in previous debates—that it is unacceptable for the single delivery to happen at inconsistent times day by day so that businesses and individuals just do not know when it will be made? When deliveries are made so late, that delays the first class post by, in effect, a further 24 hours.

Mr. O'Neill

The hon. Gentleman makes a couple of points with which I would not altogether disagree. On occasions, the service has been highly variable. My understanding is that it is beginning to bed down and the obvious excesses are now being removed. We must also recognise that not only do most other countries have just one delivery but few have the standards of delivery—even the ones that we fail to achieve—that we must currently put up with. It takes a lot longer for mail to be delivered in most of Europe, and that is certainly not matched in the United States.

Were we to have a regular system of delivery, whereby everything that could be delivered was delivered by 1.30, there would probably be an awful lot of mail turning up the next day. There would be a knock-on effect. As we are talking about trying to find a means of reducing costs, one of the major contributors to which is the removal of the second service, we must recognise that there will be differences. Nobody argued that a single delivery would be as good as two; they said that it would be almost as good, and that with other improvements, it could be as good in future.

To take a different tack, the selling of the one delivery was not well handled by the management. More than any other single issue, the problems that arose after the vote—with a number of areas taking the view that they wanted extra money and that they wanted it right away, for which they went on strike—are responsible for the failure to meet performance standards over the past 12 months.

Therefore, in the pursuit of cost reduction, the Post Office management have sacrificed service. They have gone for a quick financial fix. They have not done that only by taking out the delivery. There have been the usual things: they have reorganised, got rid of properties, realised assets that have been lying dormant, and got a far better grip on the finances. Across the board, in the public sector, one of the problems is that, provided that an enterprise does not make a profit or does not wash its face in only one year in every four, it is not too closely examined. If we consider British Nuclear Fuels Ltd. and some other public enterprises still in state ownership, we see that the quality of accounting has left a lot to be desired. The Government, as a consequence of their endeavour to have both transparency and accountancy, have been hoist with their own petard because, occasionally, they have brought out the inadequacies of the funding arrangements.

The Royal Mail left a lot to be desired. There was rigidity in the management and a failure to invest, and on a number of occasions only one target was identified—to make sufficient money to give to the Treasury to satisfy the Government of the day. It is common knowledge that until about two years ago there was no automatic sorting equipment for A4 envelopes. Given the amount of A4 mail that we receive in our mailbags—we could be regarded as small businesses—and given the nature of business in Britain, let us consider how much business mail was unsortable for a long period due simply to the fact that the Royal Mail, the Post Office, or whatever incarnation it was in, lost that opportunity.

In some respects, the service offered by Royal Mail is not rocket science. We have first class and second class mail, and then there is special delivery. That is all that is offered. For a price, FedEx and the other speedy couriers can deliver packages and letters very quickly.

Parcelforce has been a problem—some might call it an unmitigated disaster. I would not go as far as that, but I would say that it has been a source of embarrassment to a major international logistics company—for that is what Royal Mail is. It has not been able to organise the delivery of parcels. Equally, it has been extremely cautious and conservative about the range of services it has offered as a mail deliverer. That is one instance in which the old guard of the Post Office must stand condemned, and the problem dates back to before 1997. Successive Governments have demanded far too little from the postal service in terms of product range.

We are told that none of this really matters because we are moving to the age of the paperless office. That is nonsense. However, one thing that is relevant to the paperless-office argument is the internet. Why was Royal Mail not an internet service provider? Why did it not get in on that act it the outset, and why does it not do so today, when it has at least 16,000 retail outlets online? It could install keyboard facilities and the like, thus providing community access to the internet as well as access for those behind the counter. That is one of many lost opportunities.

Malcolm Bruce

Your Guide was aimed at dealing with the public service side. Surely the Post Office does see this as an opportunity, and intends to take advantage of it. Would not the development of Your Guide have made a contribution?

Mr. O'Neill

Let me explain to those who may not be as clued up as the hon. Gentleman that Your Guide was intended to be a community access point. In many respects, it was about simply providing information, and it could be described as a repository of information.

One reason why I discovered the subject of today's debate so late was that last week I was in the United States looking at, among other things, e-government and interactivity. It is clear that we still have a long way to go. Institutions such as Royal Mail could be far more interactive, not least because we now have a network of post offices online. If we want to increase footfall, we should bear it in mind that many people do not receive benefits and do not currently visit post offices. In fact, they are the majority. There is currently a captive market consisting of clients who receive benefits. Those of us who are not in receipt of benefits rarely go into post offices, because in general we have other means of getting rid of our mail. We only visit them when sending packages or buying stamps, and stamps can be bought in many places now.

We could meet at least part of the footfall challenge. It may be too late for Royal Mail to become an internet service provider. It could be argued that most ISPs in the United Kingdom with any aspirations to size and critical mass are still quite short of that, and that there are difficulties that we may well have to reap in the future. We should, however, look beyond that and consider issues relating to the delivery of mail and the question of liberalisation. I think it fair to say that the pick-up of mail will continue to be a major responsibility for the Post Office as far as post boxes are concerned. One thing that a lot of our constituents do not really understand is that boxes are opened and emptied only once a day not because the Post Office is out to save money, but because of the scale of the sorting operations that the new equipment requires, which means that it need run only in the evenings to get the sorting done. If the sorting were done during the day, the equipment would be running at only half-cock, so at least part of the pick-up function will remain.

It is understandable that banks, utilities and local authorities, which all send out monthly bills and statements, might well be attractive customers for Deutsche Post or the Dutch postal service. However, it is interesting to note—no one who has spoken so far has mentioned this—that at the end of last year, Royal Mail entered into an agreement with one of the main private operators on the cost of access to the system, which had been one of the major obstacles to liberalisation. The Post Office is now working with the private sector to deal with some aspects of the pick-up and sorting of mail.

On sorting, the picture is now a lot better than once it was. In some areas of the country, certain sorting offices had many of the industrial relations problems that I hinted at, such as a recalcitrant work force who were resistant to change and resentful of the financial rewards that they were receiving, and who wanted to make higher pay claims. As a result then were difficulties, but at least to some extent they are now diminishing, although they have not gone away I would like to think that the difficulties associated with the sorting of mail, which in many respects is the most critical part of the process, will be resolved before too long.

The last part of the process is of course the last mile delivery. I know from discussions with potential players in a liberalised market that they are not interested in delivering mail. Postman Pat's future is safe and anyone who suggests the contrary is scaremongering in the extreme. It must be made clear that the delivery of mail will remain, as far as I can see, the long-term monopoly of the Post Office, but it will not have a total monopoly. It will be subject to competition, and in some respects the competition will be painful; but I am confident that there is a mood abroad in the Post Office that can accommodate that. Both the trade union and management have shown a willingness to co-operate in this regard.

I was very critical of the Post Office's approach to the urban reinvention programme, and I remain critical of the amount of time allowed for consultation. Six weeks is too short a period; it probably should have been 12 weeks, as it is for a number of similar exercises. If local government, for instance, wants to do something, 12 weeks are usually given for consultation. One could argue that even 12 weeks is not long enough for some people, but it is probably true that the Post Office's intransigence has helped to stoke some of the fires of resentment. It should consider the issue again.

It is abundantly clear that Royal Mail is now willing to explain—it will do so if it is given the chance—that there is now a rationale behind the system of closure. There used to be no rationale to the way post offices were opened and developed in the United Kingdom. When the distribution of lottery outlets was conducted, however, Camelot used a map of the UK to identify centres of population, so that nobody would be denied access to the lottery—so that no one should be denied access to being ripped-off once a week if they so desired. In areas where that would have been difficult, Camelot changed the criteria and allowed smaller, less economic outlets the opportunity to sell lottery tickets. The Post Office did not have that luxury. Like the man going to Cork, it would not have started from where it was, but the post office network now has some rationality.

I accept that mistakes are made, sometimes serious ones, and they are sometimes badly handled—examples have been given today. However, by and large, the process is working reasonably well. As I said earlier in an intervention on the hon. Member for Lichfield, between one in three and one in four of the applications for financial reimbursement for closure have been denied. The argument is that it is Liberty Hall for post offices and if the owners want to close them they can, but that is not so.

There are even those who argue that the 28-month offer is too generous. Post office owners can not only close the shop but sell a piece of real estate and make a sizeable profit. In the grey areas that are not quite urban and not quite rural, people can acquire nice properties that used to be post offices at a reasonable price. That does not happen in all cases, but the property boom has meant that the price that can be realised for the post office building has been a significant factor. However, that is a risk that we have to take. Besides, we cannot keep people in business who do not want to be there. If people have worked in a post office until they are 65 or have reached an age at which they want to stop, it is not for Royal Mail to tell them to carry on.

We must also recognise that a post office may not be the kind of business opportunity that a young couple or a couple in early middle age who have retired from other occupations would necessarily find attractive. Franchised businesses are among the most dangerous and unsatisfactory activities for certain people. The Trade and Industry Committee last week took evidence from tenants of tied houses with the new pub companies. In some instances, people have put sizeable amounts of their own money into businesses that did not merit support. The evidence suggests that the average length of tenancy in a public house in such conditions is no more than three years. People have taken up options that were not realistic, and the position is similar for petroleum retailers. People have entered into complicated franchise agreements for gas stations across the country on the basis of poor information and advice. It ill behoves us to assume that a business that has provided a reasonable way of life for some retailers of a bygone generation will provide conditions that are attractive to people today.

Mr. Nigel Waterson (Eastbourne) (Con)

The hon. Gentleman makes an important point that the network reinvention programme was oversubscribed—more people wanted to receive compensation than could do so—but does not that undermine the Post Office's claim that once its plan has been carried out in any particular area, there will be no further closures? In reality, if other post offices are operating at the margins, they may go out of business subsequently anyway.

Mr. O'Neill

There is a flaw in the hon. Gentleman's logic. If there is a limited amount of business in an area and one of the players is taken out of the equation, the same business is spread between fewer people. If the smaller number still cannot operate, that is another issue. It is fair to say that there are people in the business with artificially low ambitions. We have all been in some pretty appalling post offices. The best are very good—excellent outlets—but some are dreadful. Sometimes, it is as if people in such post offices are doing us a favour by offering services that they are required to provide under their agreement. People expect to be able to shop all day on Saturday, but some post offices close at 12 noon on Saturday. Why? Because they have always shut at 12. That is just one example of apparent indifference.

It could be argued that such people were not making enough money from the business, but that is why the Government have made £30 million available, through the Post Office, to improve facilities. Some post office counters have closed but the shops have been left open and are being given assistance to tart themselves up—for want of a better expression. The rate of take-up may not be as high as it should be because people are uncertain, as the hon. Member for Eastbourne suggested.

The process of getting post offices online has been an unsung triumph for the British IT business; it took a long time to get to that point, but it is now remarkably successful. However, we do not yet offer anything like the range of services that we should. When I raised with one of the Scottish banks the fact that it was denying my constituents access, I was told, "You've got to appreciate that the Post Office signed an agreement with Allied Irish Bank, so why should we allow a competitor privileged freedom of access to our customers?"

The Royal Mail was damned if it did and damned if it didn't. David Mills has done a remarkable job at Post Office Ltd., but the fact that he is able to offer a range of financial services has of necessity put the nose of some of the other banks out of joint. What brought the issue to the table was the failure of the British banking system to take into account small savers and people whose accounts were not particularly active; it penalised them. Now, we have a commitment to a more social banking system. I hope that the financial services regulator will return to the issue and will set up incentives, or perhaps impose penalties if there is a failure to address the social obligations in the banking system. For all their good intentions and warm words, nobody could describe bankers as philanthropists.

We cannot deal with the issue once and for all; we must return to it. The spread of banking facilities and the integration of banking in the post office system is something that we cannot afford to ignore.

The Royal Mail had a monopoly in the public sector. Competition and liberalisation are beginning, and with a system of regulation and service obligations, are enabling those of us on the left of politics to see how important financial services can be offered in a socially responsive way throughout the country. The Conservatives are not interested in addressing that challenge. They want privatisation and liberalisation of the Post Office, probably through a more rigorous form of franchising than exists at present. I certainly think we could improve the franchising arrangements but under the Conservatives they would be rather more punitive than the laissez-faire approach that, sadly, the Post Office and its predecessor bodies have adopted.

The Post Office is still an organisation in transition. We have legislated to create the regulatory system and the system of obligations and to make the Royal Mail independent of Government interference. Of course, the difficulty is that putting something at arm's length from the Government does not protect them from the responsibility of taking the blame for everything that goes wrong. This Government do not need to take too much of the blame.

I have not spoken this evening about direct payments, cards and the like. I have gone over all that on a number of occasions, and my hon. Friend the Minister knows my views. Good friends though we are, there are some things on which we might well disagree. There is evidence of a small change, even on those issues. The Department for Work and Pensions, which I never find the most sensitive of Departments, was perhaps at least to an extent stung by the criticisms made by my colleagues and me about the way in which the card system was foisted on people, the limited range of choice and the cynical way in which the system was presented.

There is evidence of a change of tack. Whether the Department has gone as far as we want, or whether it could go as far as we want and still retain the existing system is a different matter, but the Government and the Royal Mail have a sense of the fact that there must be change. The trade union is trying its best to bring its people behind those changes, but none the less there is a feeling—I have some sympathy with it—that a system of mail delivery in the broadest sense should be a national priority and that, given its near monopoly status in that last area, it should remain in public ownership.

If the Government are true to their word—I like to think that I can believe my colleaguesߞwe will have a publicly owned Royal Mail service that enters into competition and benefits from liberalisation. Before too long—let us hope that this happens in the next 12 months—we will see an improvement in the standards of service, which have been sacrificed because of the need to sort out the Post Office's financial circumstances. I do not justify that, but I understand it. If we can get strong finances, good investment and good industrial relations, we will get the proper kind of service delivery that we want.

We may not hit all 15 targets next year—there is more than an even chance of doing so—but I hope that the four targets that the board members and senior management depend on for their bonuses will be regarded as a priority. If they are not regarded as a priority and they are not met, I hope that we will consider extending the criteria on which those bonuses are paid. Financial hanging very often concentrates the mind. That need not be done at the moment because I am confident that Allan Leighton, Adam Crozier and their colleagues barely need to be told what their responsibilities are. That is one of the jobs of government, and I am confident that my right hon. Friends are making it quite clear that we will not stand for an inadequate postal service and an inadequate Royal Mail, which should be a source of pride as a British institution, but was in danger of becoming a source of embarrassment. We have just avoided that, but there is still some way to go before it is the kind of institution in which the public sector and the public at large can take pride and satisfaction.

5.54 pm

Mr. Simon Burns (West Chelmsford) (Con)

I am sure that, for a variety of reasons, it will come as a considerable relief to the House that I do not expect to speak for very long, particularly given that, for almost two and a half hours of this three-and-a-half hour debate, we have only heard speeches from those on the Front Benches and the Chairman of the Select Committee on Trade and Industry. No Back Bencher with constituency interests has had an opportunity to speak, and it does not look as though other hon. Members will have much opportunity to do so.

I am particularly pleased that we are holding this debate today because, as a number of my hon. Friends and other hon. Members have said, we all face serious constituency problems that particularly centre on the closure of urban sub-post offices and the poor delivery of mail. I listened with interest, then incredulity, and then concern to the Minister's speech. As always, it was delivered courteously, as is typical of this Minister, but I simply could not believe that he believed some of the mantras that he kept repeating. There is a saying that, if something is repeated often enough, people will come to believe it. For a Minister, seven years after the Government came to power, to rest his case and his failings primarily on the previous Government rather beggars belief. There comes a time when even this Government must start to accept responsibility for the action or the inaction that they have taken over the past seven years.

On the Royal Mail's record, the Minister told us—I assume that he believed it because he kept repeating it—that the Royal Mail had turned around and that everything was getting better. On the narrow point of the Royal Mail's profits and losses, yes, the Minister is right, but it seems rather odd that he thinks that the whole thing has been turned around and is beginning to perform wonderfully, given that the Royal Mail missed four targets in 2001–02, missed 12 in 2002–03, and went for the jackpot last year and missed all 15. I do not think that that shows that the improvements are coming and that everything is getting better. It seems to me that, once again, given the increasing failure to meet the targets—year in, year out—the Royal Mail is getting worse in the service that it is meant to deliver to the public.

At the same time, just to add insult to injury, the poor punters—those who post the letters—must pay more. The price of the first-class post went up in 2003 and that of the second-class post went up in April this year, to make more money for Royal Mail, to help it to offset its losses, but without any improved service. On balance, there is probably good reason for the withdrawal of the second delivery, but the first class post should now be delivered in urban areas by lunchtime. The trouble is that no one has defined what lunchtime actually means. To Americans, it is 11.30 in the morning. To others, it may be 12.30 or 1 o'clock. What does lunchtime mean? Is it so wonderful a target for the Royal Mail to perform against?

We as hon. Members probably send and receive more mail than most individuals, so we have first-hand experience that allows us to monitor what is happening. Sadly, despite the great improvement that the Minister keeps talking about, Chelmsford does not enjoy a good mail service. In fact, the service is so appalling that, if I hold a surgery in Chelmsford on a Friday afternoon and I manage to complete my dictation before the sub-post office in my area closes, I am provided with a free special delivery service from Chelmsford to the House of Commons—that service is usually provided the other way around—to try to guarantee that my dictated surgery notes get to my secretary on a Monday morning. If I post them first class on a Friday night in Chelmsford—only 35 miles up the road—invariably, they do not turn up until the Tuesday. Given that we are paying through the nose for the service, it seems disgraceful that something cannot be delivered a mere 35 miles away three days later. So the authorities have kindly given me that special service, which seems to work. The post generally turns up by lunchtime on a Monday. I should have thought that it could turn up by 8 o'clock in the morning, but that is asking too much.

Why does Chelmsford have such an appalling service? Many of my constituents, as well as me, would dearly love to know. The target is for 90.5 per cent. of all post to be delivered by the next day, but the figure in Chelmsford last year was 85.8 per cent. The CM postcode area is the ninth worst in the whole country. At least 92.5 per cent. of letters posted in the CM area for delivery in that area are supposed to be delivered by the next day, but the figure is sadly only 89.9 per cent. It is especially disturbing that the figures are worse now than they were last year, despite the fact the Minister seems to think that everything has turned around and the Royal Mail is getting better. No one is confident that they will receive their mail by the time the Royal Mail promises that it will be delivered, and my constituents are disgusted by that situation, as am I.

On top of that problem, we, too, have experienced the closure of a series of urban sub-post offices over the past 18 months. Seven have closed down, two of them in probably the most deprived ward of my constituency. To return to a point mentioned by my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) when she intervened on my hon. Friend the Member for Lichfield (Michael Fabricant), a disproportionate number of people in that area are elderly and do not have cars, so they might find it difficult to go further afield to the sub-post office that they must now visit, following the closures. Young mothers with children, but probably without vehicles, must now also walk further.

There was considerable concern about all the closures, so several people wanted to try to do something about them. They took at face value the Post Office's mantra that there would be a consultation process during which all views could be invited, given, listened to and considered. Action groups were set up and petitions were distributed. I met representatives of the Royal Mail to discuss the closures. They were courteous—I have no complaint about that. They sagely nodded as I made my points, as did my constituents and Chelmsford borough council, and ooh-ed and ah-ed at the appropriate points during the discussion. However—did they do anything? They did not do a single thing; all the sub-post offices closed as soon as the statutory time scale for consultation expired.

It is all right for the Minister to say that the Post Office listens, and to produce the odd statistic to back up the fact that it cares and takes account of cases made for keeping post offices, but certainly in West Chelmsford and, if the hon. Member for Leicester, East (Keith Vaz) is to be believed, in Leicester, we find that it listens and goes through the motions, but does not pay one iota of attention to what is said or the case that is made. It closes the post offices because it wants to eliminate its losses and get back into profit.

I might be cynical, but it is perhaps a strange coincidence that few complaints are heard from sub-postmasters about the closure of their sub-post offices. If people's businesses are to be closed down by another body, they are usually the first to lead the battle to try to save them. Sub-postmasters do not do that because, as my hon. Friend the Member for Lichfield said, they are being bought off with extremely generous compensation.

Mr. Waterson

When we went through the process in Eastbourne, my petition was displayed in shops, shopping centres and other places throughout the constituency and it ultimately attracted thousands of signatures. However, the places in which copies of my petition were not welcome were the sub-post offices slated for closure.

Mr. Burns

My hon. Friend makes a good point. All too often, sub-postmasters and mistresses have been content for their businesses to close because they have been bought off by advantageous financial packages. I do not begrudge the payment of compensation if a business is closed down, but "compensation plus" is being paid to try to silence the opposition of the people who one would think would be most directly affected by the closure of the businesses. They have been reassured by the amount of money made available to them.

Notwithstanding the case that the Minister made, I join the hon. Member for Leicester, East in saying that the consultation process is a farce and that it does not work. The Post Office does not want it to work because it is determined to close the sub-post offices that it has identified for closure. That is the experience in Chelmsford and, according to the hon. Member for Leicester, East, in Leicester, although it might not be the experience everywhere. We know that a decision to close some 50 sub-post offices was reversed, but do not know their location. Given where we are in the electoral cycle, they may well be in marginal Labour constituencies. If the Under-Secretary of State for Work and Pensions, the hon. Member for Gravesham (Mr. Pond), were to let us know their locations, we would be able to form our judgment on whether that is the case. They could be in Sedgefield or Hull—

Mr. Waterson

Or Leicester.

Mr. Burns

Leicester is an interesting case. Despite the Minister's rosy words about the consideration given to the situation in Leicester, I bet my bottom dollar that the sub-post offices will either be saved on about 12 July, or closed on 16 July—certainly not before that. I cannot predict which of those two scenarios will occur, but if they are to be closed, there will be no announcement until 16 July at the earliest.

There is great concern and growing cynicism in my constituency not only about the poor delivery of mail, for which people must pay more because of price increases, but about the elimination and closure of valuable, badly needed urban sub-post offices, especially those in the socially deprived area in the west of the town—as far as that can be defined in Chelmsford.

I give a warning to the Under-Secretary. For reasons that will become apparent, especially to the hon. Member for Guildford (Sue Doughty), we get a perverse consolation from the situation. Not even this Government can get everything right. They made the mistake of announcing the first two closures in the west of Chelmsford four months before the local elections in May last year. It might surprise the Under-Secretary to hear that Labour councillors are few and far between in Chelmsford—we did not have any during the ten years up until 1995. We had five up until May last year. Three of them were in the ward in which the sub-post offices were located, but sadly for the Under-Secretary, they all unexpectedly lost their seats. When I spoke to Labour activists after the election, all that they could say was, "The war in Iraq, and those bloody post office closures that the Government inflicted on us." Let that be a warning, because people care about their sub-post offices and want a local service on their doorsteps. If the Government do not listen to public opinion, it is amazing what can happen to councillors and Members of Parliament.

6.8 pm

Mr. Russell Brown (Dumfries) (Lab)

I apologise to the hon. Member for Lichfield (Michael Fabricant) for missing his opening contribution because I was delayed before the start of the debate. From what my hon. Friend the Member for Ochil (Mr. O'Neill) said, he made an excellent speech—at least that was what I picked up.

On the back of an extremely lengthy and difficult period, postal services and deliveries are beginning to bed down, to put it in the terms used by my hon. Friend the Member for Ochil. I honestly believe—I have spoken to colleagues who have witnessed it personally—that single delivery is beginning to show some positives, although we are not out of the woods by any manner of means. I agree with those who have said in this debate that the Post Office's quick financial fixes are not necessarily the answer to the significant difficulties faced by a public service that we all hold close to our hearts and in deep affection, but sentimentality cannot and will not win the day.

Like colleagues on both sides of the House, I have witnessed some closures of rural post offices in my constituency. It is very difficult when the business of a small shop, which has been the home for the village post office and which serves perhaps only four or five dozen houses, starts to decline—not because people do not want to use the facility, but because a greater choice has developed over many years, and they have access to the main town that is 5 or 6 miles away. We have all witnessed that. It is never easy to turn such decline around. Sentimentality for a local village post office will not sustain the service for many years to come; we must be honest with ourselves.

The hon. Member for Gordon (Malcolm Bruce), who has left the Chamber, passed comment on the Postwatch estimate of 250 post offices that need not and should not have closed. That is worrying. The situation should never have arisen, but it is unlikely to be reversed.

The hon. Gentleman also commented on supermarkets. I intervened on him and referred to the proposed closure of the post office in the Safeway supermarket in Dumfries. I want to be perfectly open and honest about this: I was serving on the planning committee of the council when Safeway applied to develop its site and talked of the potential for a post office in the supermarket. I objected to that at the time because I did not think that it was right. However, permission was granted and the post office came into being, and now Morrisons, which has taken over such sites, has decided to give up the franchise.

Some say that we should be manning the barricades and fighting for the retention of the post office in the supermarket, if not run by the company, then run by someone else. The last thing that we need is a knee-jerk reaction. That was the very point that I was making to the hon. Gentleman. Within three quarters of a mile to a mile of that supermarket site, there are three or four sub-post offices. We need to consider how those businesses are running and whether there is potential to divvy up among them some of the services currently offered by the supermarket post office, such as foreign currency exchange, the issuing of vehicle excise licences, the all-international parcel service and a lottery payout facility. There should be some sincere thought about that and some answers from the Post Office. I have written to the chief executive to ask him what the plans are and whether there can be some open consultation.

Debates on postal services and post offices always come round to the argument about the move to direct payments for pensions and benefits and the Post Office card account. It is argued that if all those with a pension book or a benefits book—whether incapacity benefit or child benefit—moved to a Post Office card account, everything would be rosy. That is clearly not so. In many debates in the House and in Westminster Hall we have heard of the difficulties that people have had in securing a Post Office card account. I believe that the decision to move to direct payments was the correct one, if for no other reason than its potential for limiting fraud and other criminal activities, especially robbery and theft from pensioners. The system is far safer if used correctly.

The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Gravesham (Mr. Pond), and I have been in correspondence about the card account. He has also been in correspondence with one of my constituents, a gentleman from Dumfries and Galloway elderly forum who believes that it is not the correct system. My constituent looks at the matter from the narrow perspective that there is every likelihood that, after full investigation, someone who reports the loss or theft of their payment book and counterfoils in adequate time would not be penalised financially. However, lying behind the new seemingly failsafe system that cannot be tampered or interfered with, and on the back of the banking code of practice, is a £50 penalty for someone who loses their card on which a transaction is subsequently made.

We might say that, if someone loses their card or it is stolen, there is little likelihood of someone having the pin number. On Friday evening, a sincere and genuine couple came to my surgery and, to all intents and purposes, pleaded with me to visit their sub-post office in Dumfries to see pension day in operation. Elderly people are handing over their card then going into their purse or diary and reading out their pin number. That is breaking the contract, but we are talking about elderly people who—I say this with the greatest respect; I sincerely hope to be elderly myself one day—do not on occasions understand what is going on around them, or realise who is standing behind them and listening. There is therefore great potential for an apparently failsafe system becoming open and vulnerable.

Michael Fabricant

The hon. Gentleman is raising a fascinating point, which I am following with great interest. He mentions the security of what is in effect chip and pin. Is he aware that only this week a major bank said that we should be using automated teller machines less frequently, not because people might see the pin number entered, but because the machines might have been tampered with and be making a record of the numbers punched in? He is absolutely right to say that nothing is infallibly safe.

Mr. Brown

I thank the hon. Gentleman for his intervention. I shall not name the bank involved, because I am not sponsored by it and should not advertise for it, but I am aware of that point. The issue of ATMs immediately sprang to mind when considering the card account.

The couple whom I was talking about told me about the deep anxiety, distress and sleepless nights that the direct payment system is causing elderly people, many of whom are worried to the point of becoming ill. They even told me about one elderly lady who was having great difficulty in changing to a Post Office card account. She ended up unwell, and spoke to her son on the telephone about the problem. He came up to try to assist in submitting her name for a Post Office card account. We would all agree that that is a decent thing for any son or daughter to do, but he lives down south and made a 400 or 500-mile round trip to a constituency just over the border to carry out a simple transaction, even though his mother did her very best to speak to someone at a call centre to try to make them understand her difficulties.

The change also poses difficulties for the home carer service, although I have no figures to illustrate this. In my area—I know this is the case in other constituencies—home carers have taken their client's pension book to the post office and collected their pension for them. However, a clear policy has been established whereby home carers' employers—in most cases, the local authority—are not prepared to allow their staff members to use a card and PIN number to access something which, to all intents and purposes, is a bank account. I am delighted that the Department has decided to introduce cheque payments in October for people who find it extremely difficult to use the direct payment system. Many people will be relieved by that concession, although I appreciate that it will apply only to people who have difficulties with direct payments. Last week, the local Pension Service in Motherwell told me that in the past couple of weeks a direct payment team has been set up to look at the difficulties that individuals are experiencing and consider whether there is a specific problem. I applaud my hon. Friend the Minister, his team and the Pension Service for taking that step.

The other evening, the sub-postmaster and his wife made it abundantly clear that we are where we are and that the decision is not going to be reversed. They were glad, however, that progress has been made in looking at the problems. While someone's age should never determine whether they are fit enough to cope with the change, they suggested that the Department should have introduced direct payments for everyone below, for example, 75. That does not mean, however, that everyone under 75 can cope with the new system. People over 75 with a pension or benefit book should be allowed to continue to use it until they are no longer in receipt of benefit because of what eventually overtakes us all.

I do not know whether the Minister will consider that a helpful change to the system, but the direct payment system is causing people more than just a little worry. It is causing them deep anxiety and, as I said, they are becoming physically ill. It was right to introduce a safer method of payment that should have benefited everyone. Regrettably, however, it has become a vulnerable system for some people in our society because of the way in which they conduct their business. I therefore hope that my hon. Friend will address people's deep concerns about the Post Office card account when he sums up the debate.

6.24 pm

Mr. Mark Francois (Rayleigh) (Con)

I am pleased to speak in this important debate, which has a bearing on the lives of all our constituents. I have spoken before about Post Office closures in my constituency and I do not intend to repeat my argument today, other than to say that I am extremely dissatisfied with the way in which the process has been handled. I remain convinced that the so-called "consultation process" on closures, even in its amended form, is little more than a sham. I shall concentrate instead on the failures in the Royal Mail's delivery network. I have raised the issue in business questions, both before and after the Whitsun recess, and am pleased to have the opportunity to debate the matter in greater detail today.

The changeover to the single delivery system has clearly not been a success. In May 2004, Royal Mail admitted that it had not met any of its 15 delivery targets in the year to March, and had failed to achieve its core objectives on the minimum delivery targets for first and second class post. In the year to March 2004, 90.1 per cent. of first class mail was delivered the next day, compared with a target of 92.5 per cent; 97.8 per cent. of second class mail was. delivered on time, as opposed to a target of 98.5 per cent. In addition, while some first class mail may technically be delivered the next day, it now arrives so late that it is difficult to take practical action on it in normal working hours. In effect, traditional first class post has been virtually abolished, and in many areas the time of delivery is largely a matter of pot luck, regardless of the class of postage.

Anyone who thought that these problems were exaggerated needed only to watch the recent "Panorama" programme to be disabused of that notion. The BBC painted a truly shocking picture of life at a major London sorting office, with poor or indifferent management, sometimes militant staff and generally very low morale at all ranks. Royal Mail attempted to cope with changes in its system by recruiting large numbers of temporary staff, some of whom, to be frank, had difficulty reading and writing and finding even the most obvious addresses, leading to one near-farcical scene that was secretly filmed in a block of flats. Mail was frequently abandoned in delivery rounds or lost at the sorting depot. The worst cases exposed by the programme were of systematic fraud and theft, and it secretly filmed some members of organised gangs—not ordinary postal workers, I hasten to add—infiltrating the delivery network to steal high-value items such as credit cards and cheque books.

Some of those problems have been replicated in other parts of the country, including my own county of Essex, where the changeover was rolled out in the first half of 2004. Those problems were amply demonstrated by my hon. Friend the Member for West Chelmsford (Mr. Burns), and I should like to expand the argument with examples from my constituency and neighbouring areas, many of which are similar to the problems in London highlighted by "Panorama".

In the spring of 2004 a young female reporter from the Evening Echo, Anita Patterson, went undercover and took a job as a temporary postal worker for Royal Mail. She was based at the Basildon sorting office for about a week, although the experiences that she described are indicative of problems across south Essex, including my own constituency. She described the situation on the ground in a major article entitled, "We expose mail chaos"—I have brought it for the Minister to see, in case he thinks I am exaggerating—and her account is extremely depressing.

The changeover led to a large backlog of undelivered mail. At one stage more than half a million items were piled up at the Basildon sorting office awaiting delivery—a fantastic number of items waiting to go out. In addition, a large number of experienced postmen who knew their rounds well began leaving, with large numbers of inexperienced casual staff desperately being recruited to try to fill the gap. At one stage there were more than 40 casuals operating from the Basildon office alone. While some of the newcomers were reportedly keen and wanted to do their best, they often did not know the areas in question and had to work from maps, so deliveries took much longer than when undertaken by experienced personnel with good local knowledge, who knew exactly where they were going.

Many of the individual delivery rounds had been significantly expanded as part of the changeover process, so that customers at the back end of a round, so to speak, were receiving their mail very late in the day, with many letters and parcels not being delivered until the early evening. One Royal Mail manager quoted in the subsequent Evening Echo report stated that the previous system had run like clockwork compared with the new system, which he described as "a bloody mess".

Even brief hindsight reveals that the exercise was badly planned. The entire process should have been much more thoroughly prepared for and the subsequent execution of the changeover should have been much better thought through. The staffing implications of the change were obviously not considered properly, and neither were the potential impact on morale and the related impact on the retention or otherwise of experienced staff. The dramatic alteration in the well established delivery rounds persuaded many experienced postmen to leave, which had a detrimental effect on those who were left. It also meant that more casuals were employed, and they had to work harder to make up. The system became a vicious circle. Royal Mail appears to have had scant regard for the effect on its customers, who were effectively taken for granted throughout the process, and in many parts of Essex still are.

I shall conclude, as I know there is one other hon. Member who is anxious to speak and I want to give him his chance. I, for one, have little remaining confidence in the senior management of Royal Mail. From the people who brought us Consignia and then the post office closure programme, we now have a service that cannot even deliver letters properly and that sets 15 performance targets and then proceeds to miss every single one of them. If anybody ever wants to organise a party in a brewery, I suggest they do not go and ask the management of Royal Mail how to do it.

The Government cannot escape responsibility in the matter. It is important to remember, as was pointed out by my hon. Friend the Member for Lichfield (Michael Fabricant) at the start of his speech from the Front Bench, that it is the Government who ultimately own the Post Office and Royal Mail. However they try to spin it—I admit that in opening the debate for the Government, the Minister valiantly tried—these problems have occurred on their watch. They are ultimately responsible for the chaos on the ground. The buck therefore stops with Ministers. They need to take a firm grip on the situation and do something about it, or get out of the way and allow others to do so who are more confident to perform.

6.33 pm

Mr. Michael Weir (Angus) (SNP)

I was intrigued by the Minister's description of the reinvention programme in his opening remarks. I am sure that if it worked in the way that the Minister set out for us, it would indeed be a wonderful thing, but in my experience the reinvention programme is neither consistent nor systematic. Despite the promises that we received in the Minister's statement earlier in the year, I can see no practical difference between the consultation process undertaken now and that which was undertaken before, apart from the fact that we now get a letter from the Post Office with a printout and lovely coloured maps. The process is as bad as it ever was.

Let me give an example. Just before the Minister's statement, the Post Office announced that it was changing the way in which consultation was carried out. There was no longer to be a piecemeal process, post office by post office; it would look at a constituency as a whole. I was intrigued by that and wondered how it would be done in a rural constituency, but I hoped there might be a systematic examination of post office provision. A few days later I got a letter saying that one of the post offices in my constituency was closing. I asked what had happened to the constituency-wide appraisal, and was told that that had not started yet. That post office duly closed, despite widespread local opposition.

In April I received a wonderful letter from the Post Office giving me the grandly titled Post Office area plan for Angus. As I said, it was accompanied by a nice printout and brightly coloured maps. What it lacked was any sort of strategic thinking about the post office provision needed in a constituency such as mine. I shall give an example of the level of strategic thinking that it contains. As part of the customer profile for one of the post offices, it states: Most business comes from the local authority housing behind the office and the majority of customers are elderly". So where were those mainly elderly customers to go? They were expected to go to another post office that is just under a mile away. So far, so good, but how are those mainly elderly customers supposed to get there, as many do not have their own transport? Under the heading "Bus routes", the same wonderful printout states: There are no direct services available". In other words, customers cannot get to the alternative post office by bus, and in any event it is situated on a busy road adjacent to traffic lights where there is often a heavy build-up of traffic.

I approached the Post Office with the concerns expressed to me by my constituents and I made observations to the company regarding that closure and the difficulties with bus transport to alternative offices. The response was that buses are a matter for the bus company. So much for consultation. Surely it is a matter for the Post Office, which is—or at least used to be—a public service.

The consultation process is seriously flawed and is no more than window-dressing for decisions that have already been made. The motion, for obvious reasons, specifically mentions post offices in Leicester and Birmingham. As someone who has no intention of going to south Leicester or Birmingham, I can say that it affects all parts of the United Kingdom, including my constituency. Will the Minister please tell us the strategic thinking behind the post office reinvention programme?

Under the latest proposals there are to be three closures in Angus—one in Montrose, one in Arbroath and one in Forfar. The result is that there would be one post office left in the town of Montrose, no post offices in the west side of Arbroath, the largest town in the county, and in Forfar, the county town, two post offices close together, with nothing for the majority of the town. We were told again by the Minister today that the programme is meant to stabilise and modernise the provision of postal services. Instead, it seems to be completely haphazard and dependent on which sub-postmasters want to or can be persuaded to retire. All too often it seems as though the management approach local postmasters, saying, "We've a tub of money. Who wants to go?"

Surely the proper way to deal with the matter, as the Minister told us, although it is not what is happening in practice, is that there should be a genuine look at the entire area—constituency, local authority or whatever—mapping out the post offices required properly to serve the needs of the population. In my constituency that is not happening. We have a haphazard and unbalanced system, and I am sure that that is the experience of many other hon. Members.

As I mentioned in an intervention on the Minister, despite the fact that he said there should be a post office within a mile of where people live, the Post Office says that under its agreement with the regulator there should be a post office within three miles. As I pointed out, in any small or medium-sized town that could easily be achieved by having one sub-post office in the centre of the town. It occurs to me that the real strategy behind the reinvention programme might be to cut down the number to one in each town. This is a matter of real importance, as the programme has been funded entirely by taxpayers' money. In effect, we are paying for the reduction in our own services, and no one believes that the current round will be the last.

The situation is worse than that. When the Post Office proposed the closures, I asked it what would happen if we found someone who was willing to take over a post office at which the current postmaster wanted to leave or could not make a living. I received this response: I'm sure you appreciate that as we are still in public consultation, we cannot explore this suggestion any further until a decision is made, and obviously only then if the decision is taken for the branch to remain in the network. So the Post Office will not look at an alternative for a post office until it decides whether it wants to close it. That does not fill me with confidence that it will look seriously at alternatives.

Mention has been made of the rural post office network, but time is running short so I shall not speak about it in any great detail. Obviously there are serious things to come, and we expect many closures when the money runs out in 2006.

I shall stop there, as I am being signalled that time is indeed short, but I have serious concerns about this whole process.

6.41 pm

Mr. Nigel Waterson (Eastbourne) (Con)

This has been a very useful debate, and it has given us an opportunity to highlight problems with post offices in Leicester, South, Birmingham, Hodge Hill and across the country. It is perhaps depressingly reassuring that the problems described by the hon. Member for Angus (Mr. Weir) are exactly the same as those that we have encountered in Eastbourne, on the south coast.

The facts about the Post Office are dismal and incontestable. In total, there have been more than 1,200 closures under the so-called urban reinvention scheme. On that basis, I suppose that the blitz could have been called the urban reinvention scheme in its day. We have heard about the problems in terms of rural closures, particularly from the hon. Member for Gordon (Malcolm Bruce). We believe that something might happen after 2006, but the Government do not quite know what.

We have also heard about the failure to meet targets. Four targets were missed in 2001–02 and 12 were missed in 2002–03, and there was a spectacular failure to hit any of the 15 targets for last year. As the Postwatch press release said, there are no longer any more targets to miss. My hon. Friend the Member for Rayleigh (Mr. Francois) graphically described the effect of missing those targets on real People in his constituency. We have also heard about the senior management and in particular about Mr Adam Crozier, formerly of the Football Association. His apparent inability to get the ball into the back of the net makes him the David Beckham of the postal world.

In the short time that is available, I want to concentrate on the way in which those problems affect the most vulnerable in our society—the elderly and the disabled. Closures ale obviously a problem for them, and I also want to mention direct payments, the botched introduction of PIN pads and the exceptions service.

We have heard about closure numbers, but each statistic conceals a real problem for a real community—a community that will be that bit poorer because its local post office has closed. In my constituency, which was one of the first to be subjected to the area plan approach, five post offices were closed, including the main post office. The word "flawed" is one whose application to the so-called consultation I would entirely endorse. As far as I am concerned, the entire process was a complete farce from start to finish. Despite hundreds of letters, thousands of signatures on petitions and a well-attended public meeting in my local town hall, none of what was said made any difference at all. The process was wholly bogus. Indeed, it is so clear that that is the case that no less a person than the Minister for Energy, E-Commerce and Postal Services had to issue not a three, five or 10-point action plan on consultation, but a 12-point plan, closing the stable door firmly after the horse was long gone. Touching on what my hon. Friend the Member for West Chelmsford (Mr. Burns) said about closures, all too often the Government have stuffed sub-postmasters' mouths with gold and gone ahead and closed their offices anyway on that basis.

On direct payment, there are, in theory, three options for customers. What the Government have tried to do from the start, however, is have an extremely uneven playing field in terms of the Post Office card account. Indeed, at an early stage, when I was doing the same Front-Bench job as my hon. Friend the Member for Lichfield (Michael Fabricant), it emerged from a leaked civil servant document that the phrase "actively managed choice" was being used. That was the way in which the Government and the Post Office were trying to bully older people into going for a particular one of the options.

We have heard about the seven, eight or maybe even 20-stage process that is needed simply to open a Post Office card account. With the massive understatement for which the Post Office is quite well known, it said in its briefing for this debate: It does appear, however, that customers are being slower than expected to complete the conversion journey and start using their new accounts. I wonder why. Let me give the example of a lady from Southampton who wrote to me. I received her letter only today in my role as a shadow Minister. She says: This month, I received my Post Office Card … At a swift count I have made three telephone calls, received four pamphlets, two forms, three notifications, seven letters, one post Office Card and one Proof of Receipt (2 sides A4) from Preston, Warrington and Chester with envelopes marked for non-delivery from Liverpool, Preston and Belfast. She first applied on 20 December last year. No wonder Age Concern has said: We are concerned at the considerable hurdles that seem to be being put in the way of opening a POCA. One cannot simply go to a post office and open an account. Citizens Advice and the National Consumer Council have expressed similar concerns. The National Federation of Sub-Postmasters says: It is very clear that the Government prefers people to access their benefit payments through a bank account than via the Post Office card account. The exceptions service is designed to help people who are elderly, disabled or housebound and need a special service after the new arrangements are finally in place. We are told—I hope that the Minister will confirm this—that the full details are expected to be in place by October this year. We are told that cheque payments will start in October, and that until that time, affected customers will continue to use their order books. It would be interesting to know what projections the Department is making as to the number of people who will take up the option, although Ministers are, of course, keen to make it clear that it is not an option. With his usual ability to calm people's fears, the Minister for Pensions said: The advice to people at the moment is do not panic. I have to say that that is not quite the advice that people were seeking. The Select Committee on Trade and Industry had this to say: It is clear from the evidence presented to us that the failure of the DWP to develop its ideas for the Exceptions Service in advance of the introduction of Direct Payments has led to uncertainty and confusion over the means by which some groups of disabled people will receive their benefits in future. It is also clear that there was a failure to listen in advance to advice from organisations such as the Royal National Institute of the Blind about the design of the PIN pads, which have had to be redesigned. The hon. Member for Dumfries (Mr. Brown) made some very pertinent comments about that issue and about security in general. An apology was eventually prompted from the Secretary of State for Trade and Industry, who said: I agree that it would have been better if the original PIN pad had been designed with full regard to the needs of people with different disabilities."—[Official Report, 24 March 2004; Vol. 419, c. 910.] Finally, it seems to me that there is an enormous paradox at the heart of the policy of both the Government and the Post Office senior management. On the one hand, they want to streamline and modernise the Post Office, restore profitability and extend the range of services. Indeed, the hon. Member for Ochil (Mr. O'Neill), the Chairman of the Trade and Industry Committee, dealt in some detail with the issue of why the Post Office had been so slow to look at other services that it could be selling and at issues such as e-mail, which it could have been getting into at an early stage.

The Post Office wants to extend its range of services and invest £125 million in a link-up with the Bank of Ireland to provide financial services. That is fine and good, but paradoxically it is shutting the very retail outlets that would help it to sell those new services, alienating existing and previously loyal customers and making life exceptionally difficult for elderly, vulnerable or disabled people, by adding to their worries. In no other area of Government is the gap between spin and reality so painfully wide; I urge my hon. Friends to support the motion.

6.50 pm

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond)

This is the third Opposition day debate on post offices this year. If as much concern and energy had been invested in the post office network when Conservative Members were in a position to do something about it, 3,670 post offices might not have closed during their term in office. No Conservative Back Benchers were present in the Chamber—let alone contributed—for much of their own Opposition day debate.

The hon. Member for Lichfield (Michael Fabricant) opened the debate by generously accepting that the Government care about the vulnerable, the elderly and small businesses that run local post offices. I confirm that we care, which is why we are investing £2 billion in the post office network, and why we are spending £10 billion a year more on pensioner incomes.

People listening to this debate will find it hard to resist the suspicion that the Conservative party's newly discovered concern for post offices in Leicester, South and Birmingham, Hodge Hill is nothing but opportunism. [Interruption.] "Absolutely" says the Conservative Whip. The Government believe that the post office network is essential to local communities, whether they are in Leicester, South or Birmingham, Hodge Hill, and, working with the Royal Mail board, we are determined to do everything that we can to ensure that Post Office and Royal Mail customers receive efficient and high quality services, which is why we are committed to a post office network containing bigger, brighter and more welcoming outlets that provide people with the goods and services that they want. We want customers to return again and again through choice, and not because they are tied to a post office in order to collect their benefit.

Following years of neglect, which the previous Administration ignored, the Government have grasped the nettle to secure the future of Royal Mail and a viable network of post offices. Radical change is required if the post office network is to remain relevant in a modern society. As my hon. Friend the Minister for Energy, E-Commerce and Postal Services pointed out in his opening remarks, we are investing substantial sums to support the transformation of the entire network. For example, £500 million of Government support for one of the UK's largest IT projects has resulted in the computerisation of every post office, which allows the Post Office to continue to make benefit and pension payments in cash and provides it with a vital opportunity to widen its customer base by increasing its range of banking products, which is key to its future.

The heart of the Post Office's problem is that it has been locked into a shrinking customer base, because its income has been heavily dependent on benefit payments. I should like the House to compare the situation in 2001–02 with that five years previously, excluding benefit recipients who access money through a bank account. Even before the move to the direct payment of benefits and pensions, retirement pensions and widow's benefit paid by order books and giros decreased by more than 1 million from just more than 6 million to less than 5 million, although the total number of pension recipients increased by more than 1 million. Child benefits paid in that way dropped from just less than 5 million to less than 4 million, and incapacity benefit payments decreased from more than 2.5 million to less than 1 million.

The drop in benefit transactions at post offices involves more than people switching to bank accounts, and I will not apologise for one such reason: our record on job creation and getting people off jobseeker's allowance and income support has resulted in the best employment figures for 30 years. I will not apologise for that record, but hon. Members know that it has implications for Post Office income, and post offices must therefore find an alternative future, which we are helping them to do.

My hon. Friend the Member for Dumfries (Mr. Brown) reminded us that sentimentality, of which we have heard much from Conservative Members this afternoon, will not be enough to secure the Post Office's future. The Government want to implement the vision in the performance and innovation unit report of a thriving network, and the task is to continue to serve existing customers excellently, to attract new customers and to give the post office network access to expanding banking markets, rather than, as in the past, dwindling markets.

We have heard much about the promotion of the Post Office card account, and I doubt whether the few remaining minutes will provide an opportunity to respond to every point. The Government remain committed to ensuring that those who want to can continue to collect their benefits and pensions at post offices free of charge after the move to direct payment. Last year's successful launch of universal banking services, which not only the industry, but many of the voluntary organisations to which my hon. Friend the Minister for Energy, E-Commerce and Postal Services referred in his opening remarks welcomed, has allowed us to keep that promise.

Customers have three account choices under the new arrangements for benefit payments. They decide whether they want their benefit to be paid into a current bank account, a basic bank account or a Post Office card account. Choice is important, and the customer should decide which of those accounts is most appropriate to their circumstances. In the debate, we heard that a post office card is not necessarily appropriate for jobseekers, but it may be appropriate for other groups.

The Government have always accepted that some people cannot open an account, including, for example, some homeless people or those with an illness, infirmity or disability—others may also be in that position for short periods of time. That is why my officials and I met customer representative groups last year, including the National Association of Citizens Advice Bureaux, Help the Aged, Age Concern and Mind, to ensure that the cheque-based system was designed to meet the concerns raised in this debate by my hon. Friend the Member for Dumfries and other hon. Members. The system is designed to avoid many of the fraud problems that we encounter under the current system—for example, 100 pensioners have their pension books stolen each week, which creates heartache.

The heart of the Post Office's problems is that it has been locked into a shrinking customer base. Its task is to continue to serve these customers excellently, to attract new customers and to access expanding banking markets, rather than dwindling markets, as in the past. On top of the step changes in new banking services, other initiatives, including accepting debit and credit card payments, telephone services and a major advertising campaign for travel insurance and bureau de change services, contribute to making post offices places that customers want to visit. The Government want people to use the post office because they wish to, and not because they are forced to.

The evidence clearly shows that the Post Office cannot prosper or even survive if it stands still, and the challenge is to adapt to meet the changing demands of customers and society. The Government are determined to make sure that the Post Office has that future and that it continues to provide the highest quality of service to its customers and to be the heart of local communities.

We are making that investment. The Conservatives have made the investment of three Opposition day debates this year, but from the point of view of the people who work in the Royal Mail on behalf of the customers who depend so much on post office services, this will look like yet more of that party's crocodile tears. I commend our amendment to the House.

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

The House divided: Ayes 163, Noes 253.

Division No. 212]	[7:00 pm
AYES
Ainsworth, Peter (E Surrey)	Gummer, rh John
Allan, Richard	Hague, rh William
Amess, David	Hammond Philip
Atkinson, David (Bour'mth E)	Hancock Mike
Atkinson, Peter (Hexham)	Harris, Dr Evan (Oxford W & Abington)
Baldry, Tony
Barker, Gregory	Harvey, Nick
Baron, John (Billericay)	Hayes, John (S Holland)
Barrett, John	Hendry, Charles
Beith, rh A. J.	Hoban, Mark (Fareham)
Bellingham, Henry	Hogg, rh Douglas
Beresford, Sir Paul	Horam, John (Orpington)
Blunt, Crispin	Howard, rh Michael
Boswell, Tim	Howarth, Gerald (Aldershot)
Bottomley, Peter (Worthing W)	Hughes, Simon (Southwark N)
Bottomley, rh Virginia (SW Surrey)	Hunter, Andrew
	Jackson, Robert (Wantage)
Brazier, Julian	Jenkin, Bernard
Brooke, Mrs Annette L.	Johnson Boris (Henley)
Browning, Mrs Angela	Jones, Nigel (Cheltenham)
Bruce, Malcolm	Key, Robert (Salisbury)
Burns, Simon	Kirkbride, Miss Julie
Burnside, David	Kirkwood, Sir Archy
Burstow, Paul	Knight, rh Greg (E Yorkshire)
Burt, Alistair	Lamb, Norman
Butterfill, Sir John	Leigh, Edward
Cable, Dr. Vincent	Letwin, rh Oliver
Cameron, David	Lewis, Dr. Julian (New Forest E)
Cash, William	Lidington, David
Chapman, Sir Sydney (Chipping Barnet)	Lillev, rh Peter
	Llwyd, El[...]yn
Chidgey, David	Loughton, Tim
Chope, Christopher	Luff, Peter (M-Worcs)
Clappison, James	McIntosh, Miss Anne
Clarke, rh Kenneth (Rushcliffe)	Mackay, rh Andrew
Conway, Derek	McLoughlin, Patrick
Davey, Edward (Kingston)	Malins, Humfrey
Davies, Quentin (Grantham & Stamford)	Maples, John
	Mates, Michael
Davis, rh David (Haltemprice & Howden)	Maude, rh Francis
	Mawhinney, rh Sir Brian
Dorrell, rh Stephen	May, Mrs Theresa
Doughty, Sue	Mercer, Patrick
Duncan Smith, rh lain	Mitchell, Andrew (Sutton Coldfitld)
Evans, Nigel
Ewing, Annabelle	Moore, Michael
Fabricant, Michael	Moss, Malcolm
Field, Mark (Cities of London & Westminster)	Murrison Dr. Andrew
	Norman, Archie
Flight, Howard	Oaten, Mark (Winchester)
Flook, Adrian	O'Brien, Stephen (Eddisbury)
Forth, rh Eric	Öpik, Lembit
Foster, Don (Bath)	Osborne, George (Tatton)
Garnier, Edward	Ottaway, Richard
Gibb, Nick (Bognor Regis)	Paice, James
Gidley, Sandra	Paterson, Owen
Gillan, Mrs Cheryl	Portillo, rh Michael
Goodman, Paul	Price, Adam (E Carmarthen & Dinefwr)
Greenway, John
Grieve, Dominic	Prisk, Mark (Hertford)

Pugh, Dr. John	Syms, Robert
Randall, John	Tapsell, Sir Peter
Redwood, rh John	Taylor, Ian (Esher)
Rendel, David	Taylor, Matthew (Truro)
Robertson, Laurence (Tewk'b'ry)	Taylor, Dr. Richard (Wyre F)
Roe, Dame Marion	Taylor, Sir Teddy
Rosindell, Andrew	Teather, Sarah
Ruffley, David	Thurso, John
Russell, Bob (Colchester)	Tonge, Dr. Jenny
Sanders, Adrian	Trend, Michael
Sayeed, Jonathan	Tyrie, Andrew
Selous, Andrew	Waterson, Nigel
Shephard, rh Mrs Gillian	Watkinson, Angela,
Shepherd Richard	Webb, Steve (Northavon)
Simmonds, Mark	Weir, Michael
Simpson, Keith (M-Norfolk)	Whittingdale, John
	Widdecombe, rh Miss Ann
Smith, Sir Robert (W Ab'd'ns & Kincardine)	Wiggin, Bill
	Wilkinson, John
Smyth, Rev. Martin (Belfast S)	Willis, Phil
Soames, Nicholas	Wilshire, David
Spicer, Sir Michael	Winterton, Sir Nicholas (Macclesfield)
Spink, Bob (Castle Point)
Spring, Richard	Yeo, Tim (S Suffolk)
Stanley, rh Sir John	Young, rh Sir George
Steen, Anthony
Streeter, Gary	Tellers for the Ayes:
Stunell, Andrew	Mr. Mark Francois and
Swayne, Desmond	Hugh Robertson
NOES
Abbott, Ms Diane	Clark, Dr. Lynda (Edinburgh Pentlands)
Adams, Irene (Paisley N)
Ainger, Nick	Clark, Paul (Gillingham)
Ainsworth, Bob (Cov'try NE)	Clarke, rh Charles (Norwich S)
Alexander, Douglas	Clarke, rh Tom (Coatbridge & Chryston)
Allen, Graham
Anderson, rh Donald (Swansea E)	Clelland, David
Armstrong, rh Ms Hilary	Clwyd, Ann (Cynon V)
Atherton, Ms Candy	Coffey, Ms Ann
Austin, John	Cohen, Harry
Bailey, Adrian	Colman, Tony
Baird, Vera	Cook, rh Robin (Livingston)
Banks, Tony	Corston, Jean
Barnes, Harry	Cryer, Ann (Keighley)
Barron, rh Kevin	Cryer, John (Hornchurch)
Beard, Nigel	Cummings, John
Begg, Miss Anne	Cunningham, rh Dr. Jack (Copeland)
Bell, Sir Stuart
Benn, rh Hilary	Cunningham, Jim (Coventry S)
Bennett, Andrew	Cunningham, Tony (Workington)
Benton, Joe (Bootle)	Darling, rh Alistair
	David, Wayne
Berry, Roger	Davies, rh Denzil (Llanelli)
Best, Harold	Davies, Geraint (Croydon C)
Betts, Clive	Dawson, Hilton
Blears, Ms Hazel	Dean, Mrs Janet
Blizzard, Bob	Denham, rh John
Boateng, rh Paul	Dhanda, Parmjit
Brown, rh Nicholas (Newcastle E Wallsend)	Dismore, Andrew
	Dobbin, Jim (Heywood)
Brown, Russell (Dumfries)	Dobson, rh Frank
Browne, Desmond	Dowd, Jim (Lewisham W)
Buck, Ms Karen	Drew, David (Stroud)
Burgon, Colin	Eagle, Angela (Wallasey)
Burnham, Andy	Eagle, Maria (L'pool Garston)
Byers, rh Stephen	Edwards, Huw
Caborn, rh Richard	Ellman, Mrs Louise
Cairns, David	Etherington, Bill
Campbell, Alan (Tynemouth)	Farrelly, Paul
Campbell, Ronnie (Blyth V)	Fisher, Mark
Casale, Roger	Fitzpatrick, Jim
Cawsey, Ian (Brigg)	Fitzsimons, Mrs Lorna
Challen, Colin	Flynn, Paul (Newport W)
Clapham, Michael	Follett, Barbara
Clark, Mrs Helen (Peterborough)	Francis, Dr. Hywel

Gapes, Mike (Ilford S)	Leslie, Christopher
Gerrard, Neil	Lewis, Terry (Worsley)
Gibson, Dr. Ian	Liddell, rh Mrs Helen
Gilroy, Linda	Linton, Martin
Godsiff, Roger	Lloyd, Tony (Manchester C)
Goggins, Paul	Love, Andrew
Griffiths, Jane (Reading E)	Lucas, Ian (Wrexham)
Griffiths, Win (Bridgend)	Lyons, John (Strathkelvin)
Grogan, John	McAvoy, Thomas
Hain, rh Peter	McCafferty, Chris
Hall, Mike (Weaver Vale)	McDonagh, Siobhain
Hamilton, David (Midlothian)	McDonnell, John
Hanson, David	MacDougall, John
Harman, rh Ms Harriet	McFall, rh John
Harris, Tom (Glasgow Cathcart)	McIsaac, Shona
Havard, Dai (Merthyr Tydfil & Rhymney)	McKechin, Ann
	McNamara, Kevin
Healey, John	McNulty, Tony
Hendrick, Mark	McWalter, Tony
Hepburn, Stephen	McWilliam, John
Hesford, Stephen	Mahon, Mrs Alice
Hewitt, rh Ms Patricia	Marsden, Gordon (Blackpool S)
Heyes, David	Meacher, rh Michael
Hill, Keith (Streatham)	Meale, Alan (Mansfield)
Hinchliffe, David	Miller, Andrew
Hoon, rh Geoffrey	Mitchell, Austin (Gt Grimsby)
Hope, Phil (Corby)	Moffatt, Laura
Hopkins, Kelvin	Mole, Chris
Howarth, rh Alan (Newport E)	Moran, Margaret
Howarth, George (Knowsley N & Sefton E)	Morley, Elliot
	Morris, rh Estelle
Howells, Dr. Kim	Mountford, Kali
Hoyle, Lindsay	Mudie, George
Hughes, Beverley (Stretford & Urmston)	Munn, Ms Meg
	Murphy, Denis (Wansbeck)
Hughes, Kevin (Doncaster N)	Murphy, Jim (Eastwood)
Humble, Mrs Joan	Naysmith, Dr. Doug
Hurst, Alan (Braintree)	O'Brien, Bill (Normanton)
Hutton, rh John	O'Brien, Mike (N Warks)
Iddon, Dr. Brian	O'Hara, Edward
Illsley, Eric	Olner, Bill
Irranca-Davies, Huw	O'Neill, Martin
Jackson, Helen (Hillsborough)	Owen, Albert
Jamieson, David	Perham, Linda
Johnson, Miss Melanie (Welwyn Hatfield)	Picking, Anne
	Pickthall, Colin
Jones, Helen (Warrington N)	Pike, Peter (Burnley)
Jones, Lynne (Selly Oak)	Plaskitt, James
Jones, Martyn (Clwyd S)	Pond, Chris (Gravesham)
Jowell, rh Tessa	Pope, Greg (Hyndburn)
Keeble, Ms Sally	Pound, Stephen
Keen, Ann (Brentford)	Prentice, Ms Bridget (Lewisham E)
Kelly, Ruth (Bolton W)
Kennedy, Jane (Wavertree)	Prentice, Gordon (Pendle)
Khabra, Piara S.	Primarolo, rh Dawn
Kidney, David	Prosser, Gwyn
Kilfoyle, Peter	Purchase, Ken
King, Ms Oona (Bethnal Green & Bow)	Purnell, James
	Quin, rh Joyce
Knight, Jim (S Dorset)	Rapson, Syd (Portsmouth N)
Kumar, Dr. Ashok	Robertson, John (Glasgow Anniesland)
Ladyman, Dr. Stephen
Lammy, David	Robinson, Geoffrey (Coventry NW)
Lawrence, Mrs Jackie

Rooney, Terry	Touhig, Don (Islwyn)
Roy, Frank (Motherwell)	Trickett, Jon
Ruane, Chris	Truswell, Paul
Russell, Ms Christine (City of Chester)	Turner, Dennis (Wolverh'ton SE)
	Turner, Dr. Desmond (Brighton Kemptown)
Ryan, Joan (Enfield N)
Savidge, Malcolm	Turner, Neil (Wigan)
Sedgemore, Brian	Twigg, Derek (Halton)
Sheridan, Jim	Tynan, Bill (Hamilton S)
Short, rh Clare	Walley, Ms Joan
Skinner, Dennis	Ward, Claire
Smith, rh Andrew (Oxford E)	Wareing, Robert N.
Smith, rh Chris (Islington S & Finsbury)	Watts, David
	Whitehead, Dr. Alan
Smith, Llew (Blaenau Gwent)	Wicks, Malcolm
Soley, Clive	Williams, rh Alan (Swansea W)
Southworth, Helen	Williams, Betty (Conwy)
Starkey, Dr. Phyllis	Wills, Michael
Stewart, David (Inverness E & Lochaber)	Winnick, David
	Winterton, Ms Rosie (Doncaster C)
Stewart, Ian (Eccles)
Stinchcombe, Paul	Wright, Anthony D. (Gt Yarmouth)
Stoate, Dr. Howard
Straw, rh Jack	Wright, David (Telford)
Stringer, Graham	Wright, Tony (Cannock)
Sutcliffe, Gerry
Taylor, rh Ann (Dewsbury)	Tellers for the Noes:
Taylor, Dari (Stockton S)	Gillian Merron and
Timms, Stephen	Vernon Coaker

Question accordingly negatived.

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

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

Resolved,

That this House supports the Government's strategy for a viable Post Office network; welcomes the delivery by Royal Mail of 93 per cent. of first class letters the next day in the first half of 2003–04; shares the Government's disappointment over the drop in performance since then, which rightly falls short of customers' expectations; calls on Royal Mail and the unions to work together to improve the quality of service; notes that the closure of any post office is regrettable but supports the Government's view that, without rationalisation, unplanned closures would continue, leaving damaging gaps in the network; supports the Government's commitment to ensure that at least 95 per cent. of the urban population will live within one mile of their nearest post office; supports the Government's commitment to ensure funding of rural post offices until at least 2006; welcomes the changes to the urban reinvention consultation process and the extension of the consultation process from four to six weeks; supports the Government's move to Direct Payment and welcomes the fact that already more than half of customers are getting their benefits, pensions and tax credits paid straight into accounts, of which 3.2 million are Post Office card accounts; notes that the Opposition wasted millions of pounds of taxpayers' money on the Benefit Payment Card scheme; supports the facility for those who cannot be paid through an account, particularly the most vulnerable older people, to receive a cheque payment; and recognises that change was needed and congratulates the Government for its strong, decisive action.