Post Office Network

HC Deb 05 November 2002 vol 392 cc1-24WH

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Ainger.]

9.30 am

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

I am pleased to introduce this important debate and I am grateful that my colleagues have taken the trouble to attend.

The issue of the post office network has been in front of Governments for a long time. Since the fag end of the last Conservative Administration, Governments have been struggling with the possibility of migrating benefit payments from giro books to automated credit transfer and with the opportunities that that might offer. That will have a big impact on the future of the post office network.

I intend to make a few opening remarks and I hope that my colleagues will join in the debate as it unfolds. I think that I speak for everyone when I say that there is no objection in principle to the concept of the migration of benefits. As the current generation of benefit recipients passes on, it is sensible for the Government to contemplate the longer-term possibilities. For example, my 23-year-old son has just finished a computer science degree at Glasgow university and the likelihood of his wanting to receive his pension by means of a paper giro book is remote.

In principle, we have no difference with the Government on this issue, but genuine concern is being caused by important practical and administrative implications of the programme and by the way in which the migration is being organised and rolled out. The operation is huge and it is important that we get it right. If we do not, essential weekly payments to many families who have to live on low incomes will be prejudiced. The viability of the post office network and the Government's sensible plans to develop and promote e-government will also be prejudiced. A lot is at stake.

I am sure that hon. Members will ask a series of questions to clarify the state of play. Have the Government got a fallback position? Is there a plan B if the roll-out begins to go wrong? How will the Government react if the migration comes unstitched at the seams, errors are made and other problems arise? We would like to be reassured that contingency planning is taking place, that risk assessments have been carried out and that proper arrangements are being made in case unintended consequences make the migration process more difficult than is imagined.

We need that reassurance in the short term. It is five short months until the project goes live. When I talked to representatives of some of the banks that are important players and partners in the exercise, they said that a commercial administrative project on this scale would be piloted for some 18 months before it was rolled out live. The Government have set a very ambitious timetable. We are all crossing our fingers in the hope that everything goes well, but the chances are that something will go wrong and we need to anticipate that in the best way possible.

The viability of the network in the long term is also a matter of concern. Together with my close colleague and neighbour, my hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore), I have been in dialogue with a group of postmasters and postmistresses in south-east Scotland. I have to say to the Minister, and I report this to him accurately, that they are losing faith in the project. They are a group of dedicated, committed people, who are trusted by people in their communities. They would be excellent ambassadors and general practitioners, as the PIU report of June 2002 envisaged, and would be excellent people to keep on side. I report to the Minister as honestly as I can, and with as much conviction as I can, that they are reaching the conclusion that the Government are not acting properly or in good faith on the matter. That is an issue of serious concern. It is not me who is saying that, it is those people, and I trust their judgment. They are entrepreneurs who are doing the best that they can, but they can see no long-term future for their businesses. If that is true, it is a matter of real concern for us all.

The PIU report was published in June 2000. It posited the twin platforms of a universal bank, which would be a platform on which sub-postmasters could build an income stream in the future, and the concept of "your guide". The local postmasters saw that those two elements could provide a way forward, and that gave them confidence. The report was well written, the tone was positive and it embraced all the questions that they felt needed to be embraced. They were pleased that the 24 recommendations in the package of measures were as good for them as they could have possibly hoped.

Since June 2000, many of the opportunities presented by those 24 recommendations have been squandered. Many of the recommendations have been watered down. That is certainly the perception of the National Federation of Sub-Postmasters, which is a matter of real concern. The last recommendation in the PIU report was that the Secretary of State for Trade and Industry, who is responsible for the Post Office and all its works, should make progress reports to the Prime Minister from time to time. I am interested to know whether any progress reports have been made. If they have been, could copies of them be placed in the Library so that we can see what progress the Secretary of State feels is being made? There is a suspicion in post offices throughout the United Kingdom that little progress has been made since the report was published in June 2000.

Mr. Andrew Robathan (Blaby)

The hon. Gentleman mentioned "your guide". I do not know whether he actually saw it when it was trialled; it was trialled in my constituency, in Leicestershire. It was very popular with sub-postmasters, and they were very distressed when the project was scuppered because it failed to receive the support of the Department for Work and Pensions and other Departments.

Mr. Kirkwood

That was a timely intervention, and I am grateful to the hon. Gentleman because I was coming on to "your guide". I studied the pilot in his constituency with great interest. I agree that it passed all the tests that were set for it as far as the National Federation of Sub-Postmasters was concerned. It was an information network that had the potential to develop commercial and public sector services, in a way that would have produced an income. It would have involved postmasters and postmistresses in the process so that the concept of a general practitioner could really have been sustained, developed and built on.

The abandonment of "your guide" was a retrograde step. We are still trying to understand the consequences of that decision. The decision was wrong, and it will have a direct financial effect on Post Office Ltd. I would like to know the Government's assessment of the financial effect of the cancellation of "your guide" on Post Office Ltd. I would also like to know what the alternatives are. Commercial schemes are supposed to be available to the Post Office to keep the network viable. What is the alternative to "your guide"? It has now gone, which is a shame, but it is right that the Government are held to account. They must come up with an alternative commercial scheme that will replace the benefits that "your guide" could have provided. That is an important issue, and I hope that the Minister will have a chance to deal with it.

I turn to financial assistance for the rural network. I encourage hon. Members from urban constituencies to discuss the diversification programme for urban post offices. The future for such post offices will also be severely prejudiced if they are left to the free market with no support after 2005.

Chris Grayling (Epsom and Ewell)

The hon. Gentleman will be aware that the urban network is suffering from many of the problems that he describes in relation to the rural network. Last week, those of us who represent urban constituencies received a letter from Consignia that listed our local post offices and indicated that about a third of them were set to close. For many of our communities and local parades, the threat is one not simply of damage to the future viability of the business but of immediate closure.

Mr. Kirkwood

The hon. Gentleman makes his point well. I was told at the weekend that when, as part of the reinvention programme, the Post Office wrote to some 8,000 or 9,000 postmasters and postmistresses to ask how many of them would like to take a retirement package with a payoff enabling them to exit their businesses with dignity, some 3,000 opted in. If the Post Office had repeated that exercise after the abandonment of "your guide", twice as many people would have done so.

The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms)

I am listening with great interest to the hon. Gentleman's speech. I think that I know the answer to this question, but perhaps he can put it on the record. Does he support in principle the compensation arrangements that are being offered as part of the urban renewal programme following the recommendations in the PIU report?

Mr. Kirkwood

The answer is yes, but I do not want the package to be capped. If we are to be fair to postmasters, a package that enables them to leave their businesses with dignity should not be artificially constrained by the financial needs of, or diktats from, the Treasury. Nevertheless, I take the Minister's point. The compensation arrangements are a sensible part of the package, and I encourage the Government to continue to develop them.

As for financial assistance to the rural network, I understood that the partners were to be consulted—indeed, recommendation 6 of the PI U report anticipated that—but I am not sure that that has ever taken place. Does the Minister think that it has?

I want to tax the Minister about the social network payment. Various leaks have suggested that sums of up to £450 million over three years will be provided to subsidise the network. That is a significant amount of public money, but the key factors are whether it will be ring-fenced money that is transferred from—presumably—the Department of Trade and Industry to Post Office Ltd. or Consignia and how much of it will be passed on to the counters in the rural post office network.

Mr. Richard Page (South-West Hertfordshire)

The hon. Gentleman raises a most important point, but the key aspect is not whether the money will come from the DTI, but whether it will be dragged in from the resources of the Royal Mail or will be fresh money. That is the question that the Minister must answer.

Mr. Kirkwood

Absolutely—that is crucial. There is a suspicion out there that the money is to come from some £1.8 billion—£1.8 thousand million—that was creamed off from Post Office profits in the past and is now held as Government stocks or deposits. If it is to be new Treasury money from the consolidated fund, that is a different matter, but it would be extremely useful if the Minister could tell us more.

The other essential issue is that of managed choice versus free choice. I should be happy if the Minister said that everyone and anyone who wanted a Post Office card account would be welcome to have one. I suspect that he will not say that. I am tempted to offer him a Bank of Scotland £5 note as an inducement, but that might be out of order. I do not think, however, that I would be in danger of losing my money.

Mr. Paul Tyler (North Cornwall)

My hon. Friend has hit on a very important point. There is real confusion among the public over this matter. The Prime Minister himself gave apparent promises, which are now undermined by what is happening in practice. Does my hon. Friend agree that not only the sub-post offices are suffering from the long period of indecision and lack of clarity over the viability of their businesses? The former Crown offices, which have been privatised in the past eight years, are in the same position.

Mr. Kirkwood

I agree with that point, which is well made. We need better and further particulars about how the process will work. I have looked at some of the journeys, as they are called, described in the literature sent out by the Government to war pension claimants and child benefit recipients. The process is complicated, but it seems quite clear that people will have to "pass" a telephone interview before they will be allowed to take a card account at the post office. That is a real worry. It is also worrying that the Department for Work and Pensions seems to be in engaged in a process that will disallow—with a capital D—the promotion of Post Office card accounts by postmasters to their own customers. That seems suspicious, and a retrograde step.

Sir Robert Smith (West Aberdeenshire and Kincardine)

On the point about an unlevel playing field, a sub-postmistress in my constituency was most distressed when representatives from the bank came into her sub-post office to ask for forms to sign people up for having their benefits paid directly into the bank. Of course she did not hand the forms over, but she is not allowed to encourage people to use the post office. I am extremely worried that, in the long run, many people who have always managed their money by cash will be put in a difficult position because they will have to start managing their money through a bank account.

Mr. Kirkwood

Exactly. That is another good example of where suspicion is being built up in the system, which I do not think the Government can ignore. I suspect that the Minister is being told by his advisers that the process is on track, on time and under control, but that is certainly not the perception held by people pursuing their business behind sub-postmasters' counters up and down the United Kingdom.

Mr. David Heath (Somerton and Frome)

That suspicion is undoubtedly fuelled by the information coming directly from the Department for Work and Pensions. For example, the application process for child tax credit gives no opportunity to use the Post Office card account—it is not offered as an option to the recipients of that benefit. That seems a tremendous abdication of responsibility on the part of the Department for Work and Pensions, which seems to be distancing itself from the entire Government programme in this area.

Mr. Kirkwood

Indeed. All of this points in the same direction: the Government are capping the number of such accounts. They have set up a business case that means that the number of card accounts that they are prepared to live with will be capped at about 3 million, because anything more than that will start costing them real money. If that is the case, the Government should say so explicitly. The official line, of course, is that there is no cap, but that does not seem to be the case in practice. All the examples given by my hon. Friends in important interventions underline the real suspicion out there that the Government are not coming clean.

It is worse than that. In the Government's application to the European Union for state aids, a couple of paragraphs, which I would quote if I had time, posit the idea of inducements to stay out of Post Office card accounts. That is deeply worrying, because it is a bribe to people to enter basic or full-blown bank accounts rather than use post offices. I can see the reason for that, because there are 3 million unbanked claimants at the moment and I do not know how the Government can work round it if people do not offer to open bank accounts. However, if financial inducements of any kind were offered, it would be a clear sign of bad faith on the part of the Government, which would be deeply worrying.

Mutual advice is essential, and I cannot understand why the Government have not produced a simple leaflet explaining the merits of the three direct methods of payment that are being countenanced after next April. If such a leaflet could be agreed by the partners and made widely available, it would deal with some of the apprehension, fear and uncertainty that some retired people feel about what will hit them after April. No such document is available, and that is not sensible.

I noted with apprehension that SchlumbergerSema was awarded the contract for the roll-out of what is Orwellianly called a customer conversion centre. The company delivers medical services, so it comes with a track record that is, at least, questionable in terms of how it delivers services to the public. In turn, it has subcontracted the call centre to a company called not Vortex but Vertex. What assurances do we have that the Department will control those subcontracts and that mutual advice will be given?

The Government must tell the House how many of the approximately 15 million claimants who now use branch post offices they estimate will move to each of the three separate accounts that are being offered as alternatives to girocheque payments next April? We need to know that. We also need to know how much postmasters will receive in transaction payments for those who transfer in April. Those are important questions.

The Minister knows that much depends on putting back into the system the confidence that has been lost since the PIU report was so badly watered down. A subsidy for a social transfer network may be all very well in the long term, but my postmasters want viable commercial businesses. They do not want subsidised businesses or to live for ever off the back of subsidies from central Government. As things stand, they are not confident that in the long term their businesses will remain viable.

Mr. David Drew (Stroud)

Does the hon. Gentleman accept that part of the problem and the reason why consultation is needed is that communities must "use it or lose it"? We must encourage communities, particularly parish councils, to look to the future. Part of the problem is the age profile of some postmasters and postmistresses and the property portfolio. They must be ready for the future and build new market possibilities.

Mr. Kirkwood

The hon. Gentleman makes a fair point. The matter is not easy. It involves perceptions and vulnerable people who may be set in their ways and have confidence in the cash-based, weekly payment system. The hon. Gentleman is right to say that we must continue to use rural and urban post offices or the network will continue to erode. That would be in no one's interest. I hope that the Minister accepts that this is an important debate and that he will answer as many of our questions as possible. Otherwise, the mood of pessimism will gather and get worse.

9.53 am

Linda Gilroy (Plymouth, Sutton)

I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on securing this debate. The subject is important to everyone in the House, which is illustrated by the good attendance here this morning. I am sure that it is one of many debates that we shall have as the subject continues to occupy us.

Like other hon. Members, I have kept in touch with Post Office Counters Ltd. The communications that come to us are full of warm words, but warm words butter no parsnips. I want to flag up for my hon. Friend the Minister the concern felt in my post office community in Plymouth. I acknowledge the work that he and his predecessor, now the Minister for Employment Relations, Industry and the Regions, my hon. Friend the Member for Hull, West and Hessle (Alan Johnson), have done to secure a not insignificant package—¤210 million, I think—which will help the urban network reinvention programme. The hon. Member for Roxburgh and Berwickshire said that he hoped to hear from urban Members, and I have a totally urban constituency.

It is seven months since postmasters heard from Consignia. In April, it wrote to them outlining the package that it was hoping to develop subject to the European Union's approval. The Minister for E-Commerce and Competitiveness introduced the motion to release the money on 15 October, and the programme can now proceed.

We all hope that there will be a match between post offices choosing to go or to stay and our constituents' need for existing and new post office services. I talked to Mr. David Oakland, one of my sub-postmasters in Plymouth, who is treasurer of his local association. The Minister's predecessor met my local association and was impressed by its members' commitment to finding a new way forward for post offices, and by their understanding of the need for change.

My hon. Friend the Minister would be most welcome to meet my post office community to discuss some of their concerns and listen to their ideas for the way forward. The hon. Member for Roxburgh and Berwickshire said that there is a need for people to be able to feel confident that support exists for remaining post offices, not just by giving them money but by encouraging the business that can sustain them and giving returns on investment. We must give people the confidence that we are serious about encouraging the new banking arrangements. I am aware of the good track record on social inclusion and its financial aspects that the Minister brings to his job. Post offices must be confident that we are serious about fully encouraging new banking arrangements, and helping them to secure small business banking.

As the hon. Member for Roxburgh and Berwickshire said, there is apprehension about whether support exists. I want to flag up with the Minister two sources from which that stems. First, I understand that some post offices, which have made an initial appraisal of what is expected of the offices receiving the investment to develop services and take on extra work, are concerned that the expected extra work and the income generated from it may not break even in terms of investment for some time. I think that they are expected to match that investment funding in some way.

The second source of apprehension is the experience with the Inland Revenue. Mr. Oakland wrote to me before I rang him, and drew to my attention the concern that in the middle of negotiations with the National Federation of Sub-Postmasters the Inland Revenue sent out literature before it had finished consultations on advice leaflets available in post offices that did not mention the post office solution. The Revenue unilaterally brought forward the start date. That experience has undermined people's confidence in just how serious the Government are about enabling post offices to take on such business. That view is reflected in relation to the Veterans Agency and the Child Support Agency. Mr. Oakland is going to send me those views, which I will take up with the Minister.

Sub-postmasters are not filled with confidence about their future by that experience. They need to feel that their business is financially viable and they must be given greater confidence that it is worth their while to invest their energy as well as their money in the future of the Post Office.

My hon. Friend the Minister explained why we must be careful to protect the interests of future users of the Post Office card account that he mentioned in the debate on 15 October. However, I would like him carefully to consider how the information about it—the helpline—could act as a barrier. Could the service be evened out in some way? I appreciate the point that he made about it, but I would like him to consider whether those who are ticking a box to go through a bank account might be invited also to tick a box to ask for information about Post Office services and how their bank will work with the Post Office to offer new services.

Such information is important to people in Plymouth such as Mr. Nix from Crown Hill, who wrote to me recently about the continued availability of Post Office services: I am the first to accept progress and understand pension books are outdated but I cannot believe the government would endorse 'Postmaster Generals' being pressurised to withhold information on such an important subject. In the debate on the motion to release money for the programme, my hon. Friend was kind enough to assure me that hon. Members will be properly consulted and that Postwatch will have sufficient resources to help us to ensure that Post Office services meet the needs of present and future generations of our constituents.

Will my hon. Friend encourage Post Office Counters Ltd, to give an extra guarantee about services within half a mile in the poorest 10 per cent. of wards? Is there scope for new post offices, particularly in areas where work must be done on financial inclusion? I am thinking in particular of an area in my constituency, Mount Wise, in which the necessary facilities do not exist. Will he confirm that natural communities cluster around post offices and that in Plymouth, which is a very hilly city, the geographic layout of the city will be taken into account in the criteria that are used?

Members of the Efford community forum and I have been working very hard to get the Torridge way shops back in use again. That is the one part of my constituency that has gone downhill since 1997. The post office and Co-op shop are still there but other shops have closed. The post office business may not be thriving as it should and may not have the track record to justify being chosen for the new programme, but I hope that special consideration will be given to the investment needed to sustain post offices in communities such as Efford.

Several hon. Members

rose—

Mr. Deputy Speaker (Mr. Frank Cook)

Order. It may be helpful if I remind everyone that it is customary to commence winding-up contributions 30 minutes before the end of the debate. Looking at the clock, I see that we have only 27 minutes left. The Chair always seeks to allow everyone to speak, as far as is possible, but it will be very difficult under these circumstances, so I appeal to right hon. and hon. Members to be brief, succinct and to the point.

10.4 am

Mr. Richard Page (South-West Hertfordshire)

Mr. Cook, may I begin by—

Mr. Deputy Speaker

Order. When the House in its wisdom decided to hold meetings in this Chamber, it selected the four senior members of the Chairmen's Panel to act as Deputy Speakers. While they occupy the Chair, they are to be addressed as Deputy Speaker, please.

Mr. Page

Thank you, Mr. Deputy Speaker. I apologise for my lapse.

I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on choosing and securing the debate. I have a strong suspicion that today's debate will not be the last on the subject, and that there will be many more of them in the coming months. It is apposite that we are having the debate on the first full day on which the organisation is called the Royal Mail Group, the name to which it changed from Consignia—of course, shareholders approved both names. Whatever I am going to say today, I attach no guilt to the Minister. He is innocent, and the guilty have moved on—in some cases they have been promoted. I share the concerns of the hon. Member for Roxburgh and Berwickshire about why the changes were not brought forward earlier and why they were not piloted.

One year after the Labour party gained power, delays in getting things moving were drawn to its attention. The then Minister, the right hon. Member for Makerfield (Mr. McCartney), said: we are rebuilding a Post Office from the wreck left by the previous Government. From day one of this Government we have made the Post Office a priority and will continue to do so."—[Official Report, 14 May 1998; Vol.331, c. 501.] One year later, when he was reminded that things should be got on with quickly, he said that he had to deal with the shambles with which I had left him and … introduce measures for the future of the Post Office in a sophisticated way".—[Official Report, 13 January 1999; Vol.323, c. 269.] The tune did not change. One year after that, the Minister at that time, the hon. Member for Hull, West and Hessle (Alan Johnson), said: We do not want to upset the Conservative Benches unduly. If I was being kind, I would call their stewardship maladroit. If I was being unkind, I would say that Postman Pat's black and white cat would have provided better stewardship of the Post Office over the term of the previous Government."—[Official Report, 15 February 2000; Vol. 344, c. 868.] We heard nothing in 2001, but it all came out on 13 June, when we found that Consignia had lost more than £1 billion and the post office network, which we are discussing today, had lost £163 million. It does not look as though that will change over the next year or so. If we were being maladroit, what is the verdict on the Government? They are losing more than £1 billion, they are going to make 30,000 people redundant and they are closing more than 3,000 post offices. Perhaps the Prime Minister will come to the Dispatch Box and tell us exactly what he thinks of his stewardship of the Post Office. I say that with genuine anger because post offices and sub-post offices are closing, and I wonder what reasons are behind it.

One year ago, I asked why the Government had come forward with a plan to close post office facilities by introducing automated credit transfers without having a parallel plan ready to provide post offices with an alternative income. Why were those plans not implemented in parallel? Why were they implemented to different time scales?

Again, I am going to tread down the path laid out by the hon. Member for Roxburgh and Berwickshire. At present, 15 to 16 million people use our sub-post offices, and it has been calculated that some 3 million people have a Post Office card account. We have to ask how the figure of 3 million has been calculated because I do not know the reasoning behind it. We might be tempted to think that the remaining 12 to 13 million people will use basic bank accounts, but 85 per cent. of the 15 to 16 million people who use sub-post offices already have a high street bank account, in which case why would they want a basic bank account?

If anybody wants a Post Office card account, they are interrogated as to why they want one, not as if it were a matter of customer choice but as if they had to obtain permission. There is a real danger that an individual is going to say, "Oh blow that. I won't bother. I'll simply opt to have the ACTs into my bank account." Why can the customer not choose? Why have they got to be given permission? The major concern is that the important footfall of 15 million people going into sub-post offices every week will diminish.

Mr. Robathan

Is my hon. Friend aware that the Department for Work and Pensions told the chief executive of the Post Office, Mr. David Mills, that sub-postmasters were not to put up posters saying that it was still possible to receive benefits in cash?

Mr. Page

I was aware of that. It is just one of the ways in which the sub-post office customer is being forced in a particular direction. My worry is not so much the loss of income from benefits payments but the loss of footfall. The massive sum of £5.45 for each Post Office card account will be a poor means of making up the shortfall. It is small wonder that thousands of sub- postmasters and sub-postmistresses want out. I blame the Government for having created such a despondent mood in our sub-post office movement.

Mr. Adrian Flook (Taunton)

My hon. Friend said that excessive numbers of sub-postmasters wanted to give up. Has he any idea how many?

Mr. Page

I have heard that it is some 3,000. We do not know whether they are the same 3,000 who are to be chopped by the Government. Let us hope that they are, in which case it will work out amicably. However, I understand that some postmasters will be forced out of business even if they want to continue, because their offices do not meet the criteria. I shall not go through the report published by Postcomm the month before last, although it raises huge concerns about the direction and success of the sub-post office movement.

The arrangements are being introduced in a rush just a few months before ACTs come into operation. Can the Minister tell us what contingency plans have been made in case something goes wrong? Does he agree that if £150 million per year is earmarked for rural post offices over the next three years, Horizon running costs are £100 million, the reinvention of the sub-post offices—Labour spin for "Let's close 3,000 sub-post offices"—will cost £70 million a year and the banks are having their arms twisted for £36 million, that comes to some £356 million a year? We shall "save" £400 million by the introduction of ACTs, so the whole exercise will produce a so-called saving of £44 million. I worry whether that is a genuine figure, and I am concerned about the loss of footfall. Our sub-postmasters and sub-postmistresses will go through a very hard time.

I urge the Minister to tell every Member of Parliament in every constituency which sub-post offices are to be closed. In my constituency, 13 are scheduled and tagged as urban. Those who run them are worried; they know that they are at risk. The sooner they know their fate, the better they will be able to plan for the future.

In conclusion, the Royal Mail Group, as it now is, faces huge problems from overseas competition and from licensing arrangements that might allow competition from countries in which we cannot compete. The disaster that our post office network is experiencing has occurred because the Government have been far too slow and far too late in bringing forward their plans.

Mr. Nick Hawkins (Surrey Heath)

Does my hon. Friend agree that the threatened closure of sub-post offices under this Labour Government is a worry for the elderly? That segment of our population relies on the post office; for many, it is the centre of their social world as well as being important for the services that it provides.

Mr. Page

My hon. Friend speaks about the effect that the loss of footfall may have on sub-post offices. As I said, it is not only that no money will be coming from transactions across the counter; they will also lose other sales as a result of the loss of footfall. If they lose that income, the sub-post offices will be at risk; and £150 million a year will not be enough for rural sub-post offices. If post offices are lost, the character of the countryside will be destroyed—never mind what will happen in urban areas. As I said at the start, the Minister is not guilty. He has a huge responsibility for the future.

Several hon. Members

rose—

Mr. Deputy Speaker

Order. I ask right hon. and hon. Members to bear in mind not only my advice with regard to their own contributions but their acceptance of interventions, especially from those who only recently entered the Chamber.

10.15 am

Mr. Tony Lloyd (Manchester, Central)

Let me preface my remarks by agreeing with the hon. Member for South-West Hertfordshire (Mr. Page): my hon. Friend the Minister is certainly not guilty. In fact, the hon. Gentleman himself may be one of the guilty men. The Conservative Government were guilty because of their signal failure to ensure that the Post Office management stood up to its responsibilities. In the Post Office, the present Government have inherited one of the most incompetent management structures in British industry. The charge that I put to my hon. Friend is that if the Government are not prepared to get a grip of the Post Office management, we will have replicated the mistakes made under the Conservatives. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) did us a service by introducing this debate. It is vital that the pressure is kept up on the Government by Parliament, and by the Government on the Post Office.

The whole of my constituency falls in that part of the world where every ward is in the most impoverished 10 per cent. of wards as allowed for by the Government and the Post Office. I was told that their criteria meant that no post office should be closed if the next nearest post office was more than half a mile distant. That provides my impoverished constituents with better facilities, but as an elderly constituent told me recently, even half a mile by zimmer frame is a long way. That may sound like a joke but it happens to be true. In impoverished urban areas, people—particularly the elderly and the vulnerable—have far less access to the motor car and the other social structures that support them. I strongly applaud the logic of giving them that extra protection.

I must ask for your advice, Mr. Deputy Speaker. I know that I cannot accuse hon. Members of lying, and I would not want to, but am I allowed to accuse the Post Office of lying? That effectively is what it did in terms of its promise about the closure programme.

In my constituency or near it, five sub-post offices are not operating. Two of them have been non-operational for well over 12 months. The Post Office tells me that they are not closed but are simply not open. That is a difficult concept for my constituents to grasp. The Post Office argues that it is looking for new sub-postmasters and mistresses to operate them, but the charge against the Post Office is that it is deliberately not looking for replacement people. Those sub-post offices have de facto become part of the closure programme. The two post offices in question are in West Gorton and Rusholme, in the constituency of my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman).

The charge is one of deliberate deception. I have put forward the name of a local business person who is anxious to take on the role of sub-postmaster in one of those sub-post offices. He has an impeccable trading record and no criminal convictions, but the Post Office will not take him on, saying that it does not have to give a reason. Frankly, the Post Office should give its reasons for including a post office in its closure programme—albeit by subterfuge—if there is a business to be run and someone willing to take the commercial risk of investing in it.

More worrying are the cases of the Clayton Bridge and Oldham Road sub-post offices, which recently closed. In Oldham Road's case, the lease ran out—the Post Office presumably did not know that it was going to, even though the position must have been clear from the legal documents for many years. The post office was closed even though the decision was disputed. My local council says that Oldham Road was more than half a mile from the nearest facility, but the Post Office claims that it was only 0.4 miles away. The dispute could be resolved by running a pedometer along the road to find out who is right. The Clayton Bridge post office, in the Newton Heath ward was, by the Post Office's own account, 0.7 miles from the nearest facility. The Post Office told me, however, that both post offices would have closed anyway because of circumstances beyond its control—the expiry of Oldham Road's lease and the lack of co-operation on the part of the sub-postmaster at Clayton Bridge.

The Post Office's decisions are undermining the promise that the Minister made in good faith in Parliament. That is why I must make accusations in this Chamber about deception and lying on the part of the Post Office's most senior management. I look to him to take the Post Office firmly by the throat and to squeeze until those responsible begin to tell the truth and to operate in a manner consistent with his undertakings to the House. The Post Office owes that to him and to my constituents.

10.21 am

John Barrett (Edinburgh, West)

I join other hon. Members in congratulating my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) on securing this debate. I also pay tribute to him for his hard work over many years in support and defence of our post office network.

There are 21 post offices in my constituency, and according to correspondence that I recently received from Consignia, 18 are classed as urban. One third of urban post offices are due to close, so by the law of averages, six of mine will go. That prospect has left many constituents deeply worried. Indeed, they are so concerned that 6,000 of them have signed my petition, which makes it clear that local post offices are at the heart of local communities and that something must be done about the closures. That worry has quickly turned to anger, however, because like me, my constituents do not believe that the case for so many closures has been made. Postwatch has said that 3,000 closures are too many and are unnecessary, and my constituents are inclined to agree.

However, it is not simply urban offices that face a problem, and there are still serious questions about the future of rural post offices in my constituency. In a letter that I received some months ago, the Post Office told me of its intention to close the post office in Dalmeny, a small village in my constituency. Betty Hardie, the local postmistress, had worked there for many years but was heading for retirement. Consignia's inability to find a replacement left the post office facing closure. The sub-postmistress has decided to stay on in the meantime while alternatives are considered. We are having to rely on individuals' determination to continue local post office services that are under serious threat because the future of the income that they generate is uncertain.

I mention Dalmeny because the blame for such circumstances falls squarely at the Government's door. The problem is that they have failed to tell Parliament, the post office industry or the public how they intend to make up the massive loss in post office revenue that will arise from ACT. I searched through the Hansard report of 15 October, but found no answer from the Minister. Clearly, no answer will come from the "your guide" scheme, despite the relatively successful pilot. If the Government do not provide answers on this crucial issue, they will leave the remaining urban and rural post offices with an uncertain financial future. No sane person will want to enter an industry that is so full of uncertainty. Cases such as that of Dalmeny village, whose post office faces closure because of the failure to find a replacement sub-postmaster, will become more common. I call on the Minister to take this opportunity to address that crucial point.

The briefing prepared by the regulator Postwatch last June gives an excellent background to the Government's policy to move the payments of benefits and the state pension to automatic credit transfer. On page 4 of that document, under section 5.3, it states that it is important to ensure benefit recipients are fully and fairly informed", and that there are no hidden pressures to favour one type of account over another". It goes on to say that the information presented to benefit recipients must be complete and impartial. Postwatch clearly had concerns that pressure could be applied to those on benefit in favour of one of the options on offer, namely ACT into current or universal bank accounts. As more and more evidence comes out that customers continue to be pressured not to take up the Post Office card accounts, it is clear that those concerns were justified. I ask the Minister to take those matters seriously, as such evidence clearly goes against the recommendations of Postwatch.

It has been said many times, but it deserves to be reiterated time and again, that post offices are vital to the communities that they serve. The closure programme, veiled by the Government under the heading of regeneration, the prospect of losing six or more post offices in my constituency, and the insecurity that will remain, are frightening to me and my constituents. They must not be allowed to happen.

10.25 am

Mr. John MacDougall (Central Fife)

I think that everyone is concerned by the impact that the review has had on communities and on sub-postmasters and mistresses, but we must accept the reality of the situation. Taking no action at all did nothing to keep down the distance between the community and the post office, nor can it guarantee that the cause of concern will be automatically removed. Some 3,500 post offices closed under the last Conservative Government. I am not suggesting that anyone is to blame for that, but those are the facts. Taking no action would mean that post offices would close in any case, so it would do nothing about the distance that the elderly and others have to travel back and forth. Cleary, then, action has to be taken.

The history leading up to today's debate and the way in which some matters have been handled have not been helpful. However, I think that the Minister is not to blame in that regard, and that the Government are doing everything they can to address a complex issue. I, too, have concerns on communication, and hope that increasing efforts will be made to convey the scale of the challenge that lies ahead. We cannot overlook the fact that the post office network is the largest retailing network in the UK, and it must be handled as a serious business if it is to play a part in providing services in our communities. I think that it is better to have a planned rather than a reactive way forward. We must of course get approval for some of the measures that the Government want on remuneration and reinvestment for those post offices that wish to remain in he system.

Clearly no one wants post offices in their constituency to go. As was said earlier, however, without the custom coming through the doors, post offices will inevitably close. It is far better to structure the way ahead rather than simply to react.

10.27 am

Ms Joan Walley (Stoke-on-Trent, North)

I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on securing the debate and apologise to him for not having been present at the start.

Without arguing about how we got into the present situation, and understanding that many throughout the country are relying on him to find the way out of it, I urge the Minister to look at the debate in the round. The new powers that Government have given the regulator in respect of post office services must be examined. Can the Minister assure me that he will consider carefully the possibility that the regulator will seek to bring greater controls in exchange for the proposal to increase the price of a first-class stamp? That could have a real bearing on the rest of the post office network and is important to today's debate.

As someone who represents a constituency that is both urban and rural, I am anxious to ensure that the £15 million for the urban network should be readily available. I remind the Minister that there is a letter from me in his in tray on his desk that asks whether some flexibility could be given to the way in which the Government determine which of the most deprived constituencies should benefit from that £15 million. In my constituency, there are many wards that fall within the 15 per cent. of the most deprived areas. The Government should show some flexibility in that respect. Many of those wards have parts that fall within the 10 per cent. most deprived, so we should be entitled to some of the £15 million that is going to help the urban network.

If the Minister could give me that assurance, I am sure that Mr. John Morris, the chairman of my constituency branch of the sub-postmasters' federation, would be most heartened.

10.30 am

Dr. Vincent Cable (Twickenham)

I add my congratulations to my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) who, not only today but over the past five years, has kept this issue under discussion, through his Select Committee work and in repeated debates. He has reminded us constantly that there is a clock ticking for this process.

We have had many debates on the subject, so I do not want to go over again how we got where we are and who is to blame for it. I simply want to pose a series of questions to the Minister, because I am unclear in my mind about how the process will work. The central issue, as it has always been, is how the £450 million of income to the Post Office will be replaced. Frankly, I do not think that we are any the wiser about that than we were two years ago when the performance and innovation unit report was introduced.

We had a full debate on the urban regeneration programme on Opposition day a few days ago, but some issues were not resolved. What happens if, as now seems increasingly likely, there are far more urban post offices trying to close than there is compensation for? The hon. Member for Manchester, Central (Mr. Lloyd) hit the nail on the head when he referred to the odd phenomenon of post offices that are neither closed nor open. I suspect that we shall have a lot of post offices in that position. What happens if 5.000 of the 9,000 want to close? I believe that that is the ratio in some of the big cities. Will 3,000 be compensated while the others are left in limbo, or will the compensation money be spread more thinly? How will the rationing process be handled? Again, we must ask why there is a cap.

I would also like to know how the appeals process will work. Again, the hon. Member for Manchester, Central hit the nail on the head when he suggested that half a mile is a long way for someone with a zimmer frame. It is also a long way if there is no bus route or there is a steep hill. My experience of Post Office Counters Ltd. management is that it is often appalling and totally insensitive to the needs of local communities and local entrepreneurs. I cannot understand how the appeals process will be managed.

Postwatch is to handle the process, and so far it has done well, but with only three or four appeals at a time. How will it handle 1,000 or 2,000 appeals? What are the mechanics of that? Can the Minister reassure us that there will be a proper case-by-case investigation when local communities are deeply unhappy with the closure process? Where are the resources that would allow the process to happen speedily and thoroughly?

Mr. Tyler

I have a local example. In my constituency, the Post Office has said that the distance to the nearest post office is four and a half miles and that it is undulating. For a pensioner without a car, the information that the route is undulating will not be helpful.

Dr. Cable

My hon. Friend is right. Even in urban areas where the distances are smaller, many of the same problems of access apply, so a process must be in place to consider the closures carefully.

On the rural programme, we have had a leak relating to the social transfer, which is a subsidy or payment of some description of £400 million to keep the rural post office network intact over the next few years. That is welcome. However, the hon. Member for South-West Hertfordshire (Mr. Page) has already asked how we can be sure that the money goes where it is supposed to go. If it is a general payment to Post Office Counters Ltd. or Consignia—the Post Office—how do we know that it will meet its purpose? Even if the money is designated for the rural network, what will happen? Will individual sub-postmasters apply for it and receive a payment based on their turnover? Must they submit an individual business plan against which payment may be made? We know that there is poor take-up of the investment programme for rural post offices. How will the large programme be managed? I ask that because there is a massive lack of certainty about, and confidence in, the network, and confidence will not recover unless people understand how the payment flows will work.

Several hon. Members said that we know from anecdotes and people to whom we talk that people are either actively discouraged from using Post Office card accounts or are simply not told about them. The National Federation of Sub-Postmasters produced a leaflet but was told that it was not possible to use it. The initial reason given was that Post Office management would not allow it. I checked that with the Post Office and it was adamant that the Government, rather than it, imposed a ban on advertising. I hope that the Minister will confirm that, although I appreciate that it was not his Department but the Department for Work and Pensions that forcefully said that Post Office business could not be promoted through card accounts. We must be clear about what is happening in the Government.

Can we get a bit closer to the arithmetic? The hon. Member for South-West Hertfordshire said that a Post Office card account costs about £5, although I do not know where that figure has come from.

Mr. Page

It costs £5.45.

Dr. Cable

If we gross up that figure to 15 million customers, it amounts to £80 million, which is the amount that it would cost the Department for Work and Pensions to equip every user of the network with a Post Office card account. In order to save the Department for Work and Pensions £80 million a year, the Department of Trade and Industry is providing subsidies of £400 million to the rural network and compensation of £450 million to the urban network. The whole thing is completely insane. We might be working with the wrong numbers, which the Minister can clarify, but we can see that peculiar economic arithmetic that does not add up is being used. Will he explain, precisely, the savings made by not using Post Office card accounts more widely?

My final point is very simple and returns to one of the main themes of our debate in the House two to three weeks ago. We were then aware of the termination of the "your guide" system, although I do not want to go over the rights and wrongs of that again. The Minister took a positive stance and said that he had not abandoned the principle of post offices continuing to offer a general practitioner service, although that would not happen through the "your guide" mechanism. Will he spell out what the general practitioner service will involve, and tell us whether the Government will support that financially? We have lost a main mechanism, but that might not be the end of the story. What will the Government put in its place?

10.38 am

Mr. Andrew Robathan (Blaby)

I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on securing the debate. That is not just a normal courtesy of the House; the debate has shown that cross-party concern exists about the future of the post office network. Indeed, there is increasing worry about whether the network has a future.

Since the Government came to power in 1997, they have had no clear policy on the Post Office, which was illustrated well by my hon. Friend the Member for South-West Hertfordshire (Mr. Page). In 1997, the Post Office was making a profit, but Consignia is now losing £1.2 million per trading day. How long is that sustainable? I understand that the company is supported by Government bonds from past Post Office profits, but how long can that go on?

We have heard, and we recognise, that the post office has a special place in the hearts of people in this country. That is a fair comment about which I doubt that there is any dispute. I received a letter yesterday from an 87year-old pensioner who lives in Essex. He told me that he is practically housebound and that, although he can reach his current post office, it is under threat of closure. Whatever the rights and wrongs of the matter, this is his perception. He says: What am I, and thousands or millions in similar circumstances, to do? Age Concern has written to us all to say that, for the elderly in particular, there is a special place for post offices. I understand that the Post Office has a slogan saying that they are "an essential part of everyday life".

The Conservative party has been running a "save our post offices" campaign and we have collected thousands upon thousands of signatures. [Laughter.] Labour Members are laughing, but last year 547 post offices closed and I think that I am right in saying that only some 200 closed between 1990 and 1997. The situation is rather different now.

Mr. Timms

The hon. Gentleman's figures are somewhat inaccurate. In 1991–92, well over 400 post offices closed.

Mr. Robathan

However, over the period, the average figure was 200. I notice that the Minister does not deny that 547 post offices closed last year.

Mr. Timms

I am happy to deny that, because the figure was substantially lower. I think that the hon. Gentleman is referring to an earlier year.

Mr. Robathan

The figures that I am looking at are for 2001, and I think that we are still in 2002—but never mind. Let us not get bogged down.

Mr. Page

The figures released are for 2001 and they show that 547 post offices closed. Those figures were released by what is now called the Royal Mail Group. In the years to which my hon. Friend and the Minister referred, there was a planned closure programme in which various sub-post offices were offered the chance of voluntary closure.

Mr. Robathan

I will let the Minister respond to these points in his speech. The figures have come from the Royal Mail Group and the Minister must address why it may have got them wrong—although I doubt that it has.

In my constituency—as, I suspect, in everybody else's—post offices have been closing. That has been happening with alacrity over the past five years. I can think of examples in Swinford, where I used to live, Claybrooke and Enderby St. Johns. Rural areas often have similar needs to those in urban areas. We have heard about a lack of transport in urban areas, but in rural areas there is often something like one bus a week. To use new Labour terms, poverty, exclusion and deprivation exist in rural areas as well.

Postcomm's report last year said: The services offered by Post Offices branches are particularly important for certain vulnerable groups in rural and in urban deprived areas, who are more affected by closures than other members of society. When a post office closes, it leaves a hole in the community, so what are the Government doing? In June 2000, the PIU reported and the Prime Minister famously said: I welcome this report which the government fully accepts. Postwatch's annual report for this year says that the slow progress has been very disappointing. Since the PIU's 2000 report, about 1,000 further post offices have closed.

I would like to consider three aspects of the network, beginning with the urban network. Only last month we discussed urban reinvention. We are told that some 3,000 sub-postmasters definitely wish to give up. That is quite neat, because the Government propose, with the Post Office, that perhaps some 3,000 post offices will be closed. Furthermore, approximately a third of sub-postmasters expressed an interest in giving up. It therefore seems as if half the remaining post offices will remain under threat. I hope that we will hear further details from the Minister.

The Postwatch annual report says that sub-postmasters have become increasingly desperate as rumour has fed rumour. Postwatch wants to know whether it will be given sufficient time for consultation on each proposed closure.

Secondly, I would like to consider urban deprived areas and, specifically, the post office fund for urban deprived areas. Sadly for the Post Office, this comes under the Office of the Deputy Prime Minister. On 15 October, its website said: It is expected that the fund will become operational in Summer 2002. Further details when available will be posted on this page. After I raised the issue, the website changed. It now says: The Office of the Deputy Prime Minister is seeking to launch the scheme in the Autumn of 2002. I am not quite sure how long the autumn goes on for, but it continues: The proposed scheme will seek to contribute to the regeneration … it is expected to support It is all very well having a wish list, but sub-postmasters and people living in urban deprived areas want to see some Government action on this. Perhaps the Minister can tell me when the autumn ends and when that will happen.

Thirdly, there is the rural network. We have heard of the large sums of money that are likely to support rural post offices over the next three years. I am sure that that will be welcomed by all rural post offices. At DTI questions last Thursday the Minister said that the announcement would be made shortly. When will that be? What are the details? Most fundamentally, what happens after all the money has been spent over the next three years?

The Government will take away on average a third of a postmaster's income when the universal bank comes into operation in April. What will be the interest rate for the current card account? How many inquiries have there been? How many accounts does the Minister expect? Will it be only 3 million, or will more be allowed? After all, 1 April 2003 is less than five months away. What is the response of the public to the bullying announcement that they will no longer be able to receive cash if the Government have their way?

We have heard before about the 20 steps that it takes to open a Post Office card account, as opposed to the one that it takes to have money paid into a current account at a bank. The card account will also not have a CAT standard. Indeed, in response to a parliamentary question that I tabled recently, the Minister said: The Government has no plans to produce a CAT standard for the Post Office card account. The card account is the only account of its type. quite distinct from current accounts and basic bank accounts." [Official Report, 31 October 2002; Vol. 391, c953W.] The Government will apply that standard to basic bank accounts and yet it cannot apply to the Government-sponsored account. It seems perverse that the account will not measure up to the Government's standards on charges, access and terms. Furthermore, the Secretary of State said that CAT standards would help to combat financial exclusion. A City source was quoted in The Daily Telegraph last week as saying: The Universal Bank account will not be eligible for the CAT standard. It does not provide any of the basic facilities. This must be a huge embarrassment to the Government. I do not want to detain the Chamber too long, although there is much more to be said about this. All I would say is that the Government's behaviour has added to the confusion and uncertainty and the feeling that they have been dithering over the Post Office for five and a half years. There is a lack of support across the Government. The Department for Work and Pensions refuses to support the DTI on "your guide" or indeed on the concept of the universal bank and support for the Post Office in general. There is a lack of joined-up government. The executive summary of the PIU report referred to new lines of business. I will name three of them; e-commerce; one-stop shops for Government information transaction; internet learning and access. None is coming forward.

We understand why sub-postmasters want to give up. They look to the future and see no plans for a sustainable commercial livelihood. The Government are taking away one third or more of their incomes from benefits payments. What will replace that? The National Federation of Sub-postmasters speaks for most, although not all of the small business men who run our sub-post offices. In a briefing it sent last month it said: It is now over two years since the publication of the PIU's report… During this period, sub post offices have continued to close at an alarming rate, morale throughout the network is at an all-time low… Of the 24 recommendations made by the Cabinet Office's PIU, very few have been implemented, funding has not been delivered… the timescales for implementation of recommendations have slipped further; the development of new roles for subpostmasters has ground to a halt; and there is widespread stagnation and inactivity across a wide range of the recommendations. That deserves an answer, as does the following resolution passed at the federation's conference on 15 October: That this conference demands Her Majesty's Government to take immediate action to avert the collapse of the nationwide network of post offices. The Government have not responded to that, as far as I know. At the moment, we see fog in the future, which I fear may conceal impending chaos and further closure.

We have heard today, from hon. Members on both sides of the Chamber, about the mess over which this Government are presiding. The Government are responsible for the situation. What will they do about it?

10.49 am

The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms)

I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on securing this debate. He has long played an important role in social security matters as Chairman of the Select Committee on Work and Pensions and in many other matters as well. The debate will make a useful contribution to the discussion.

The hon. Member for South-West Hertfordshire (Mr. Page) rightly reminded us that Consignia is no more. As of yesterday, we may speak of the Royal Mail Group, which faces very tough challenges. It needs to respond to the changing demands of its customers, to wider changes in society, and to the impact and opportunities arising from new technology.

The post office network provides a vital local service. It serves some 28 million people every week, and is the largest retail network, not just in the United Kingdom, as my hon. Friend the Member for Central Fife (Mr. MacDougall) rightly said, but in Europe. It includes half as many branches again as all the banks and building societies put together.

However, people are not using their local post offices as much as they used to. Some 42 per cent. of benefit recipients now access their benefit payments via bank accounts rather than by order books, compared with 26 per cent. in 1996. Over the past five years, the number of retirement pensions and widow's benefit payments paid by order books and giros has decreased by more than 1 million, from slightly more than 6 million to less than 5 million, even though the total number of pension recipients has risen by more than 1 million. Incapacity benefit payments at the post office have fallen even more dramatically, from more than 2.5 million to less than 1 million. Similarly, over the past five years, Girobank transactions at post offices have fallen by 37 per cent., as has the number of stamps sold.

The post office network must adapt to changing lifestyles, changes in people's preferences and new ways of doing business. Last year, the Post Office's operations overall lost £1.2 million per working day. The ability of sub-postmasters to sell on their businesses—the way in which people have moved on in the past—has taken a very severe knock.

There is a clear need for change in the post office network. That is why the Prime Minister asked the Cabinet Office's performance and innovation unit to develop the strategy for modernising the network about which we have heard. It made 24 recommendations, all of which the Government accepted.

The hon. Member for Roxburgh and Berwickshire asked me particularly about the annual report. My right hon. Friend the Secretary of State keeps the Prime Minister regularly informed of progress on the matter. However, Postcomm will publish an annual report on the state of the post office network, which contains the updates to which he referred.

We have been able to implement all those recommendations only because the Government have made the biggest ever investment in the Post Office—nearly £500 million—on modern online computer systems for every post office in the country.

We are making good progress on preparations to introduce the universal bank from next April. The ambition is to build on the uniquely trusted ground that the Post Office has, and to modernise and extend its commercial banking arrangements so that it becomes the nation's leading provider of access to bank accounts—the universal bank. That is our ambition for the post office network.

All the high street banks have now signed up to deliver their part of the plan. There are two strands to universal banking: first, full access at any post office, anywhere in the country, to the basic bank accounts that will, from next year, be offered by every major bank and building society. Currently, those institutions, between them, account for 99 per cent. of all the current accounts in the country, and they will offer new, basic bank accounts that will be fully accessible at any post office. The second strand is the Post Office card account, which will be solely for benefit recipients. They will be able to use it only at a post office.

My hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) asked about the literature issued by Inland Revenue and the lack of reference in it to the Post Office card account. Sub-postmasters have expressed several concerns about that. My impression is that people are happy with the literature issued by the Department for Work and Pensions, but less so with the Inland Revenue literature. When I examined that literature, however, I noted references to the Post Office card account—exactly on a par with references to basic bank accounts. If hon. Members wish to draw my attention to further concerns about the literature, I shall be happy to examine it further. However, I would encourage them to read the literature closely: if they do, they will find that the Post Office card account is dealt with exactly on a par with the basic bank account, as I said.

Linda Gilroy

The main point on which assurance is required is that the Post Office card accounts will be treated on a level playing field. I assume that my hon. Friend wants that, too.

Mr. Timms

I can assure my hon. Friend that that is exactly the Government's intention. Both accounts will be introduced from April next year, when the migration to automated credit transfer will begin. Card readers and PIN pads are being rolled out across the whole network. The work is ahead of schedule, with 40 per cent. of post offices, including both post offices in the House of Commons, already equipped. So Members can see them for themselves.

The emphasis of the migration and marketing strategy will be to ensure that each customer has the best account for his or her circumstances. No eligibility requirements will apply and—to answer a couple of hon. Members' questions—no cap will be placed on numbers. Customers will choose the most suitable account for their circumstances. The package also represents a good deal for sub-postmasters, who will be paid for providing banking services to a wide range of customers, not just to benefit recipients. We can look forward to many more customers entering post offices to access bank accounts, which will provide the potential for substantial new business based on developing the post office network as the universal bank.

Conservative Members asked about the number of closures. Last year—in 2001–02—262 post offices closed. The significantly higher figure referred to was for the previous year. It reduced so sharply because of the changes introduced by the Government, particularly the assurance that no avoidable closures of rural offices would be allowed. I am pleased to say that the falling trend in post office closures has been maintained into the first six months of the current :year—127 closures up to September. The trend is falling, though more undoubtedly needs to be done.

We debated the urban network on a Government motion—not an Opposition motion—in the House on 15 October. I welcome what the hon. Member for Roxburgh and Berwickshire said. It remains the case that too little business exists for the number of post offices in urban areas, but we want to ensure that postmasters who want to leave are able to do so with dignity. Of just more than 9,000 urban post offices, more than one in eight has 10 or more other branches within a mile, and 155 offices have 15 or more such branches within a mile. For reasons that I have outlined, the volume of business is insufficient to support so dense a network. We must restore the urban network to commercial viability, restoring also the confidence of the sub-postmasters. That is critical if we are to attract much-needed new investment into the network.

In some parts of the country, Liberal Democrat representatives have started campaigning against the closure of post offices that are not going to close. I listened with interest to what the hon. Member for Edinburgh, West (John Barrett) said about that. No doubt as we speak, his party is, in its finest traditions, writing "Focus" leaflets attempting to claim credit for saving those post offices. That activity is presented as being in support of the post offices concerned, but in reality nothing is more likely to undermine a successful business than telling people that it is threatened with closure, so I hope that we will not see that. I was not aware of the Conservative party's "Save our Post Offices" campaign, but I look forward to hearing more about that, too.

To conclude, much change is needed in the post office network, but the Government are putting in place measures to make that succeed.