Urban Post Offices

HC Deb 25 February 2003 vol 400 cc31-54WH

2 pm

Mrs. Annette L. Brooke (Mid-Dorset and North Poole)

I am pleased to introduce this important debate at such an apposite time. Against a background of 3,500 post offices being closed between 1979 and 1997 and the closure of a further 1,700 up to the end of last year, the first post office closures under the urban reinvention programme are being confirmed. Furthermore, 1 April looms, when the phasing-in of all benefits to be paid through the banking system will begin.

My constituency is made up of both rural and urban areas, and I emphasise that I am concerned for the future of all post offices, but it seems sensible at present to concentrate on urban post offices. There is the question of how an urban post office is defined: in principle, that should be straightforward, but I am aware of at least one dispute over a post office which has been designated as urban, but which currently serves a small community surrounded by a green belt.

I come to this debate having heard confirmation of the first closure in my constituency under the reinvention programme: Hillbourne post office, which is 10 minutes from my constituency office. In addition, local media are reporting proposed closures in Poole and nearby Christchurch. I am sure that the number of hon. Members supporting this debate reflects the level of concern across the country.

There have been many debates on the future of post offices. We all accept that post offices form a vital part of the social fabric of our country. In the suburbs of my constituency, there are many distinct communities of which the local post office is the focal point. The people most dependent on those post offices are the elderly, the disabled, single parents and the less well-off.

The local post office is often the last retail or cash outlet in the community. I have heard stories of elderly people making a trip to the post office every day, sometimes just to buy a single stamp. The visit performs the vital function of keeping them physically active and providing social contact with others. In addition, a post office being located within a shop carries spillover benefits through the provision of goods for customers and extra spending in the overall business. The closure of a local post office can have adverse effects on many people's lives, and it is important not to focus merely on commercial viability.

The performance and innovation unit report on the Post Office published in June 2000 made 24 recommendations, including shutting some urban branches to improve the prospects of those remaining, and investing in the remaining branches to make them more attractive. The proposals announced last October identified £180 million to fund the closure of urban post offices, with grants for updating individual post offices limited to £10,000. It is to be welcomed that the special fund for deprived urban areas has, at long last, been announced.

I am going to quote the Minister, I am afraid. He said that a rational case could be made for changes in the post office structure and that a properly planned, properly managed process, which will protect access to the post office network in every urban area" —[Official Report, 15 October 2002; Vol. 390, c. 229.] was desirable. It is very difficult to disagree with that statement. However, today we have an opportunity to evaluate the progress made so far. It is difficult to argue that there should be no closures, but I cannot accept that 3,000 post offices one third of all urban post offices—should be shut.

Post office business has been declining for several years. Until recently, dealing with benefit payments still accounted for about 40 per cent. of post office income, but the rush to introduce automated credit transfer in April 2003 has really been the final straw for many postmasters. There may well be efficiency arguments for the change, but consumer wants are important.

The Secretary of State for Trade and Industry wrote to all MPs in October 2002. He said: We have been keen to listen to the concerns of all our customers. They told us that two of the most important things to them were still to be able to collect their money from the Post Office and to be able to collect it weekly. Both of these options will be available. Letters outlining the options for benefit recipients who currently collect their benefits at the post office are being sent out on a phased basis to a total of 16 million people. The options are the ordinary current account in a bank or building society, the new basic bank account and the Post Office card account. By 10 January this year, 103,000 customers had opted for payments to be made to bank or building society accounts, but only 26,000 had opted for a Post Office card account. Only the Post Office card account will allow cash to be collected from post offices. It is therefore important that the post office competes with the other options on a level playing field. If our post offices are to survive and if the Government are determined not to defer the changes, it is essential that the process be handled well.

Sandra Gidley (Romsey)

Does my hon. Friend not agree that there are alarming reports suggesting that the Post Office card account has not been adequately promoted and that most people are unaware of the advantages of having such an account? That is especially true for those whose current accounts are in deficit, because their benefits will be funding their overdraft. Many people do not realise that a Post Office card account would give them access to the cash.

Mrs. Brooke

My hon. Friend makes some important points. For example, applying for a card account seems much more complex than applying for other accounts. Is it necessary to refer potential customers to a call centre? It seems that recipients are being actively discouraged from using Post Office card accounts, and the agencies do not seem to be promoting them as strongly as the other options. The National Federation of Sub-Postmasters is concerned that the Department for Work and Pensions is planning to encourage existing customers to open a basic bank account rather than a Post Office card account.

Many are concerned about the start date of April 2003. For example, there seems not to be a significant gap between the trial for the Post Office card account and its widespread implementation. The timing of the dispatch of personal identification documents to eligible benefit recipients is another matter for concern. The pilot scheme in Tyne and Wear showed that many people were not prepared to have their benefits paid into bank accounts or card accounts. They refused to choose any of the options, but I have yet to hear a full explanation of what will happen after 2004 to those who continue to refuse. An exceptions service is due to be introduced, but when will full details be published? Will the Inland Revenue, the Veterans Agency and the Department for Work and Pensions all use the same exceptions service? With only 34 days to go, many questions remain.

I am particularly concerned about how the new system will operate for the blind and partially sighted. Indeed, I tabled an early-day motion on the subject, and I hope that many hon. Members will sign it. The cash machines already installed in nearly all post offices present a problem for many blind and partially sighted people. In a letter of 21 January to the Dorset County Association for the Blind, a local benefits manager wrote: I have spoken to our head office, who tell me that before the machines were installed there was extensive consultation with the RNIB, who did approve the final design. That misinformation is alarming. The Royal National Institute of the Blind is asking the Post Office to introduce a new PIN pad, and in the meantime to offer an alternative to those who cannot use the existing PIN pad. The current pad has a small display with little contrast, its small keys are very close together and people have a particular problem finding the number 5.

I understand that the RNIB's initial recommendations were ignored. I was pleased to hear today that the problem is at long last being acknowledged. A spokesperson for the Post Office has admitted that mistakes were made in the development process and that we have not acted upon the representations from the RNIB and other disability groups. Will the Minister tell us today exactly what will happen? How much precious money will have been wasted? More importantly, what provisions will be made for blind and partially sighted people and when will such provisions come into effect? I hope that a specially designed PIN pad will be available at every post office along the lines of the big button phone. Those suffering from arthritis, for example, will also require suitable equipment.

Age Concern is worried about elderly people being required to remember a personal identification number, a concern with which I have every sympathy. Exceptions will have to be made for those unable to cope with such a system. I have real anxieties that people who forget their number or who lose it will be unable to access cash for a few days. Some of those who receive benefits and pensions are among the most vulnerable in our society, and confusion and hardship must be avoided. In addition, anything that makes the collection of cash from post offices more difficult will affect the income of the whole operation and will deal a body blow to the whole network. There is a case for deferring the implementation of the programme for direct credit payment for the time being.

The other side of the coin is that there should be support for initiatives to increase footfall into post office branches to generate more income. Sadly, the Government announced the end of the "Your Guide" initiative, which was designed to turn post offices into information centres. Perhaps the Minister will outline what plans the Government have to support initiatives to generate more income from post office branches. Failing to protect current income on one hand while failing to support other replacement income streams on the other will mean maximum cuts in the network not minimum ones.

Simon Hughes (Southwark, North and Bermondsey)

Does my hon. Friend agree that the case that she makes is often entirely undermined because the Post Office, when asked what the contract would be, is very unclear, and those who want to make a financial contribution do not know the score? Does she remember that several times I raised with the Minister's predecessor and with others a case in the Elephant and Castle? There, someone wants to run a post office and is willing to make it income generating with other business. This person has tried to get goalposts for setting up a business from the Post Office, but they can never get any that do not move. That must change if post offices in my hon. Friend's constituency and in mine are to continue.

Mr. Deputy Speaker

Order. That is rather a long intervention.

Mrs. Brooke

I thank my hon. Friend and agree with all that he says, which fits in well with what I intend to say about the closure of the post office in my constituency. There, the postmaster was happy to accept the proposed package. His business had been declining for a long time, and he had already given up on the shop in his business as it was not even worth his while to employ staff. He did not want to stay around to watch his business decline still further with the introduction of ACT—indeed, he was pretty demoralised several years ago, after the Government made their first announcement, when he realised what would befall post offices in 2003. Perhaps that had already taken the heart out of his incentive to run his business and contributed to its decline.

The agreed procedures were adhered to: posters were put in the window, local councillors and the local MP were contacted. I visited local post offices to see how the customers were reacting. They were upset, but they understood the postmaster's position, as they were aware that it had been a long time since they had queued at that particular post office. There was no petition and no general outcry against the closure of the post office. It was regrettable and a nuisance, but customers knew that a well-respected postmaster was making the best business decision, given the pay-off. There were several post offices within the required distances, and details of alternative provision were clearly set out.

Mr. Christopher Chope (Christchurch)

Does the hon. Lady accept that it does not make any difference if there is a local outcry or a petition? There was a petition with 1,000 signatures and an enormous local outcry about the Stanpit post office in Christchurch, and Postwatch objected. Despite all that, the decision to close the post office was rubber-stamped.

Mrs. Brooke

That is precisely my fear. Let me make it clear to the Minister that I do not object to all post office closures. I am aware of one that is quite sensible. What frightens me is mass closure and the fact that individual circumstances are not considered.

I made representations, in my view, thoughtfully and not confrontationally. I asked about the post office that was likely to pick up customers. What parking arrangements would there be for disabled people? Was there sufficient capacity to provide a good service at peak times? The letter that I received from Post Office Ltd. confirming the closure told me that parking for the disabled was a matter for the local authority—thus pushing the problem on to someone else—and that the postmaster had indicated that he could cope with the expected extra customers. There was no mention of any investment of £10,000 or even £1,000 to improve the facilities. Where were the proposals for the brighter, better surviving post offices? I was very disappointed with the reply, because some good changes could have been made to ensure that that post office would survive.

How many post offices whose proposed closure prompts an outcry, as described by the hon. Member for Christchurch (Mr. Chope), will be reprieved? One feels that once the poster goes up, the result is a foregone conclusion. There is a case for some closures, but we are on a slippery slope in assuming that so many urban post offices should be closed. I fear that the Government are helping us towards the slippery slope by insisting on rushing ahead with ACT.

I should like to see the evidence of investment in surviving post offices and a real attempt to change the business management culture in the Post Office. I should like to see details of the Government's plans for supporting initiatives to promote extra business in surviving branches. If we cannot have "Your Guide", which many of us thought was rather good, what can we have? We all have a part to play in encouraging people to use their local post office before they lose it.

2.17 pm

Mr. Tony Lloyd (Manchester, Central)

The Government deserve congratulations on one part of the post office closure programme: the decision about post offices in some of the most deprived urban areas. I have a vested interest—you have a similar one, Mr. Deputy Speaker—in that every ward in my constituency is in the bottom 10 per cent. according to the measures of deprivation used by the Office of the Deputy Prime Minister. The Government negotiated with the Post Office an agreement that in those areas no post office should close if there was not another one in a half mile radius—as opposed to the mile radius used as the standard in closures nationwide. The problem is that although the Government have put up the money, the Post Office is not honouring its agreement.

After a Westminster Hall debate on 5 November—a bonfire of Post Office vanities, so to speak—David Mills, the chief executive of the Post Office, wrote to me about my remarks. He said: I refer to your comments alleging a closure programme by `deception' and 'subterfuge' and your accusation about 'deception and lying on the part of the Post Office's most senior management'. No doubt he was very upset, but the accuracy of my comments has been borne out by the actions of the Post Office even since he wrote to me.

I want to draw the Minister's attention to some post office closures in my constituency. The closure of the Rusholme sub-post office predates the present closure programme. For a long time, the Post Office insisted to me that it was actively seeking new premises to which to relocate the sub-post office. When Mr. Mills wrote to me in November, however, he already seemed to have given up the ghost. He said: It is regrettable that the Rusholme branch had to close in the first place but at least there is now a better prospect of Post Office services in the area being maintained in the longer term. That was the first official notification that I had received that the Post Office had given up looking for new premises. The local community and I are entitled to object strongly to the closure programme that the Post Office has implemented by deception.

The situation got worse, however. One local subpostmaster—hon. Members will see in a moment why I do not give his name—told me about a meeting that he and other sub-postmasters had with Post Office middle management. One manager told them, "Of course, the closure of Rusholme is a matter of interest to only one or two Members of Parliament," by which he meant me and my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman). It is unacceptable for managers to say that the issue is trivial when many of my constituents have been extremely inconvenienced and are deeply aggrieved by the Post Office's programme of closure by subterfuge.

In his letter, the chief executive referred to the decision to close the Lower Oldham Road post office. The Post Office said that it was closable because it was within 0.4 miles of the next nearest post office, at Newton street. That post office is in a very busy part of the city centre, but the closed Lower Oldham Road branch lies in an area of enormous deprivation, and many elderly people depended on it. That aside, we have constantly disputed the distance given by the Post Office, and one local community activist, Richy Carrothers, walked from the Newton Street branch to the Lower Oldham Road post office with a measuring wheel. He discovered what we had always maintained—that the distance is more than half a mile. The Post Office is wrong, and I have to accuse it of cheating; that is what its actions amount to. It is not difficult to measure the distances involved, and if Richy Carrothers can do it, the Post Office can. I am still waiting for it to rescind its decision, because it is in breach of the spirit and the letter of the closure programme.

The result is that people are nervous about the future of post offices in the whole of my constituency. The Clarendon Road post office in Whalley Range is up for sale, but the rumour is that it will be summarily closed and that the Post Office will allow it to disappear from the system. That is the concern among local people, such as Chris Paul, who are campaigning to keep it open. The Post Office always says that it is not breaching the letter of its programme and that there are reasons for a closure, such as the lease running out. Of course, such things happen in business, but a Post Office that plans its affairs should understand how must time is left on a lease, and it should be able to say whether a lease needs renewing or whether alternative premises need to be found.

I appeal to my hon. Friend the Minister to talk seriously to the Post Office and to make it aware of my strong challenge to it. Specifically, it is carrying out a programme of closure by deception, and the problem is being compounded by the unacceptable remarks of its staff in private meetings.

Mr. David Lepper (Brighton, Pavilion)

My hon. Friend has remarked several times on the veracity of comments made by the Post Office. Does he agree that its public reputation has suffered because of its handling of the consultation process? I have in mind the Havelock Road, Bates Road and Ditchling Road post offices in my constituency. The date for objections was set nine days before the Postwatch consultation meeting in the constituency. Members of the public who attended the meeting rightly expected their views to be taken into account, but the Post Office had no intention of listening to those views at the consultation meeting.

Mr. Lloyd

My hon. Friend makes a powerful point on which I wanted to conclude. I tell the Minister that in the end the Government will come under criticism if the Post Office mishandles the closure programme. The examples given by my hon. Friend, and those from my constituency, have led to great cynicism among the public.

I make a plea to the Minister to get a grip on the Post Office. Can he persuade it that the kindest way to describe its handling of matters so far is "clumsy and inelegant"? I prefer the words I used earlier—what has happened amounts to cheating and lying, although that is less elegant on my part. The issue matters enormously, because the Government accept that the Post Office is a vital link, especially in the most deprived inner urban areas, where it is often the only facility around which the community can base itself. Numerous other local small businesses depend on that facility. We want to fight to save our post offices, and we look to the Minister to help us to make the Post Office honour its responsibilities.

2.25 pm

Andrew Selous (South-West Bedfordshire)

Like the hon. Member for Mid-Dorset and North Poole (Mrs. Brooke), who commenced this debate, I should like to mention the fact that rural post offices in my constituency have closed down. I am sure that all hon. Members are equally concerned about post office closures, whether they be in towns or villages. For pensioners to have to travel miles by bus from their village to a neighbouring village or town to get a pension is as unacceptable as it is for those in towns to have great difficulty in accessing post office services.

I am especially concerned about the Downside post office in south-east Dunstable. The Post Office recently announced that it intends to close it on 19 March, in spite of the fact that it is the first post office closure in the whole country to which Postwatch, the consumer watchdog that works on behalf of all post office users, has formally objected. That raises the question of what the purpose of Postwatch is if, after having considered the cases of some 300 post offices in which it acted responsibly and did not formally object to closure, it is overruled by the Post Office the first time that it objects. Hon. Members are entitled to ask what is the point of the consultation exercise.

Mr. Andrew Robathan (Blaby)

I met the chairman of Postwatch today. Postwatch is incensed about the closure that my hon. Friend mentions. Downside is the right post office to keep open in Dunstable, yet it is likely to be closed solely because that suits the Post Office, rather than because it suits the customers.

Andrew Selous

I am grateful for that intervention from my Front-Bench colleague. I look forward to his support and that of the Minister in our ongoing campaign to keep Downside post office open, or, failing that, to open a new one almost immediately next door to it.

I share the concerns expressed by the hon. Member for Manchester, Central (Mr. Lloyd) about the consultation. My view of that process is that it is, frankly, a sham. I was given the great honour of being asked to chair the public meeting at which the closure of the Downside post office was discussed. A wide range of community organisations attended the meeting: officers from the town council and the district council, local councillors from all the different parties, the head teacher from the local lower school and many people from the local community. The meeting lasted well over an hour and a half. However, in the formal response that I received from Mr. George Hooper of the eastern area, there was not one reference to any of the concerns that had been raised. What is the point of consultation if concerns are not addressed by the Post Office at a public meeting? That leads to considerable cynicism among our constituents about the role of Postwatch and the consultation.

Mr. Chope

Does my hon. Friend accept that Postwatch also believes that the fact that it deals only with the customer relations side of the Post Office adds to the public's cynicism? It is concerned that people think that this is all a public relations exercise and that those in the Post Office who are involved in taking the decisions have already made up their minds and nothing will change them.

Andrew Selous

I wholeheartedly agree. That is the impression that my constituents and I have. We will appreciate anything that the Minister can do to change things; I know that he is as concerned as the rest of us.

Mr. Mike Hancock (Portsmouth, South)

It is interesting that in the case of the closure in my constituency, the Post Office agreed to come to a public meeting only yesterday, a week after the closure was announced, and not before.

Andrew Selous

Exactly the same thing happened in my constituency. Some of us were cynical when the Post Office said that it was extending the consultation process, and our cynicism has been borne out. The concerns raised at the meeting have not been addressed in the letter that I received from the Post Office.

The Post Office claims that there is a neighbouring post office less than half a mile away. The furthest part of the Downside estate is well over a mile and a half from any other post office. A large number of its elderly residents do not have cars and cannot access public transport easily, if at all. There are also many young families, who will have great difficulty travelling a mile and a half with children in pushchairs, through an estate and up the busy A5 main trunk road to the next available post office. It is unacceptable for such people to have to do that.

I have already heard that many home helps, who collect pensions and other benefits for elderly residents in Downside, will be unwilling to go to the next nearest post office. Distance is not the only measure. What about topography? Dunstable is a hilly town; people will have to go up and down hills and endure the considerable traffic pollution along the main trunk road—with its danger for young children—to get to the nearest post office.

Despite the fact that Martins, a huge national business, with a branch some 20 yds from the threatened post office, has offered to run a post office from its premises, the Post Office has had what I can only call the arrogance to claim that there is not a business case for a post office in that location. Martins is already a successful, thriving business in that parade of shops. Surely the addition of post office services will bring extra revenue, so how can the Post Office claim that it is not a viable business? That is not a decision for it to take; the management of Martins and the local branch want to go ahead, but the Post Office is apparently unwilling to countenance the idea.

My second major concern is the reason that the Post Office picked that particular post office in Dunstable. No post office closure is ever popular; there are downsides to the closure of any public facility. However, there are several post offices close together in the centre of Dunstable. If one had to pick a branch to close—the Post Office lost £163 million last year, so I understand why it would want to make closures—it would not be that particular one.

I am also worried because the Post Office seems to have done no analysis. The only other post office on the south-west side of Dunstable is owned by a group of stores that has been bought by Tesco, which has publicly said that it does not intend to maintain the post offices in those shops. There is therefore a danger that the other post office on the south side of Dunstable, albeit not very convenient to get to from Downside, will also close. There is evidence that the Post Office has not considered the sustainability of neighbouring post offices.

Downside is situated in the Manshead ward, which is already in receipt of single regeneration budget funds. It is ridiculous that on the one hand the Government are pumping about £750,000 into that ward to sustain and revive the community, while on the other hand they are taking away a vital community facility. It looks amateurish; it is as if the left hand does not know what the right is doing. The good work that the SR B money will do will be undermined by the closure of this post office.

When Mr. Hooper of the Post Office came to the public meeting, he said that it would lose up to 41 per cent. of its income because of the transfer of benefits and pensions to automatic credit transfer. That is a huge loss of revenue for any business. The Government have to bear responsibility for taking that amount of income away from post offices. It is worrying. As a member of the Select Committee on Work and Pensions I visited the new Pension Service call centre in Burnley; the first in the country. Mention of the Post Office and its card account is made only right at the end of the script that will be used by all the telephone operators when our constituents ring in to claim their pensions. It is an afterthought; all the other options are pressed on people first. Only if they fail to pick any of the other options are they offered the Post Office option—they almost have to hold out for it.

The Department for Work and Pensions seems to be working against the Post Office and our constituents' ability to access local post office services, in another example of unjoined-up Government. I implore the Minister to have words with his counterparts in the DWP to do something about this issue.

I raised the issue of the Downside post office with the Minister's office two weeks ago and I am grateful that he is here to respond to the debate. I look forward to his response with interest.

Several hon. Members

rose

The Deputy Speaker (Mr. O'Hara)

Order. Hon. Members present will note how many wish to contribute to the debate. The wind-ups must start on the hour.

2.37 pm

Linda Gilroy (Plymouth, Sutton)

I had not intended to make a contribution to the debate, so I shall be brief. I congratulate the hon. Member for Mid-Dorset and North Poole (Mrs. Brooke) on securing a debate on such an important topic. Post offices are very much part of the fabric of our society and it is important that we enable the future survival of their network.

The truth is that people are not using post offices as much as they used to. Whereas a few years ago 26 per cent. accessed their benefits and pensions payments via bank accounts, that figure has now gone up to 42 per cent. We know how that has happened: reference has been made to the number of Government agencies, from the Veterans Agency to the Inland Revenue, that are seeking to modernise their services, and to the payment of working families tax credit and pensions.

We have to try to balance the consequences for post offices against our duty to safeguard taxpayers' money. It is important that those various agencies are able to get the benefits they deliver to people at a minimum cost to the taxpayer. However, the Government are investing £1 billion in rural and urban post offices over the next few years to try to help them to make the transition through change that is happening in any event as people change the way in which they do business, using cash machines and the internet as well as making direct debit transactions through their bank accounts. The investment of £1 billion is not insignificant, but post offices are concerned about the changes none the less. The problem is as much the uncertainty as anything else—trying to work out what their cash flow and business will be, particularly in the next two years, is fraught with uncertainty.

I thank my hon. Friend the Minister for meeting a delegation of four sub-postmasters from the Plymouth district recently, and one reason why I wanted to make a contribution to the debate was to put on record some of the issues that we were able to explore with him. We discussed the way in which the forms do not give a level playing field when people are considering whether to open a Post Office card or bank account, and the Minister has agreed to examine some aspects that were drawn to his attention. Post offices are keen to make the most of their new role in banking, but the sub-postmasters made the point that people do not see the Post Office as a bank. As the banking services are introduced, there is a huge job to do to change the public perception of what post offices can do with and for people.

We are talking about some 9,000 small businesses facing considerable uncertainty in the coming year or two. That is the number in urban areas, and I think that the number in rural areas is similar, if not greater. The post offices are small businesses run by enterprising people who are part of the fabric of the community, and one thing that came out of our discussions, to which I hope my hon. Friend the Minister will refer in his concluding remarks, was the positive way in which he greeted the point that the Royal Mail and Post Office will not give independent advice to those post offices as small businesses in their own right. That is for all the reasons referred to by hon. Members, not least because some of the best post offices are not necessarily the ones that the Post Office wants to survive.

Post offices are run by enterprising business people. I hope that my hon. Friend the Minister will comment on the work that he can do with the Small Business Service and the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths). They should examine how the Small Business Service can help those post offices during the next two years by examining them as individual businesses, not as the Post Office views them.

What are the new opportunities for post office services? How can they make the most of them? What opportunities exist for them to diversify, especially locally? They should consider the work that they pick up everywhere, from local authorities to housing associations, and how to make the best of those opportunities. In cities such as Plymouth, after the urban reinvention programme and the emergence of the network through that, is there a case to set up some sort of co-operative that will help post offices to examine the opportunities for local business, as opposed to what they do with the Post Office nationally?

I conclude by thanking my hon. Friend the Minister for meeting the sub-postmasters, and I look forward to his response. I apologise in advance if I have to leave in the middle of his comments, because I have another delegation from Plymouth to meet. I do not get many from as far away as Plymouth, but they are up to see me about the local health service.

2.43 pm

John Barrett (Edinburgh, West)

Like other hon. Members who have spoken today, I have rural post offices in my constituency. There are three of them, but it is the urban post offices that we are here to talk about today. In my constituency, 18 post offices are classed as urban and, like the rural post offices, they are under threat because of the uncertainty surrounding the way in which benefits and pensions will be paid in future.

Urban post offices are threatened by the reinvention programme. Its title implies a positive development, but it is a closure programme. As Postwatch has said, the estimate of approximately 3,000 closures is too high—such a large number of closures is unnecessary. We are seeing a plan that suits the Post Office. Some closures may be necessary, but there must be a co-ordinated approach with a comprehensive list for each area.

Hon. Members talked about distances, but it has been pointed out that distances can be arbitrary. They can cover hills, or areas that have a good bus service and are between neighbouring post offices. Often, the best alternative would be if two post offices merged, but the Post Office is picking off individual post offices, which may not be in the best interests of the community. I want a comprehensive approach to a service that many people, especially pensioners, disabled people and the elderly, find absolutely vital.

Constituents such as Val Murray, who came to my office, will have real problems if their local post office closes. The next post office might be within an acceptable distance, but the distance of a mile can be a real problem if there is no bus service and someone does not have a car. A mile will not be a great problem in other parts of my constituency where the vast majority of householders have cars, but it will be a problem in other areas.

Individual post offices have not yet been named, but I am concerned about the consultation process. Examples given by hon. Members show that process to be seriously flawed. The one-month consultation does not give many community groups, community organisations and individuals the opportunity to play their part, nor does it lead them to believe that the Post Office is likely to listen.

A third of urban postmasters expressed an interest in closing their branch, but most people are interested in a compensation package until they find out what it is, and who can blame them? Most people asked whether they would be interested in discussing compensation for early retirement or redundancy would want to know what the package was.

People are constantly given the reason that there are too many post offices too close together, but one only has to look in any city street and see Starbucks, Costa Coffee and Café Nero to know that it is not just the distance between similar businesses that makes them survive or not be viable. Individual small businesses are often part of a larger business, and in most areas—certainly in most cities—we would certainly be closer to having bigger, brighter and better post offices if they were regarded as vibrant small businesses that could be encouraged.

Some 8,000 people in my constituency have signed a petition to say that they are worried about the future and are concerned about the plans that are yet to unfold. Many people do not know what the impact of ACT will be. They also wonder where the universal banking services are. There is confusion ahead, and if we are to find a way forward, we should accept that post offices are parts of other businesses.

The closure programme will have the same effect on post office services that the Beeching cuts had on the railways. We will look back and say that it was definitely a mistake. Post offices are one of the best retail networks in the country and, I believe, the largest retail network in the United Kingdom. We should build on that, make use of it, and work in conjunction with local authorities, banks and tourism agencies to develop those businesses. We should use information technology, whether in the form of cash dispensers or the web.

Some post offices may close, but they should not close just because they are too close to another post office. They should be allowed to close only if the service can still be delivered. Any idiot can close down the least profitable part of a company and then say that they are getting a better return on the capital invested, but if the urban reinvention programme means what it says, it is time to reinvent the Post Office. It should come up with something better than the current closure programme. Pensioners, the elderly, carers and those who use the service deserve that, and the Post Office will deserve a hard time in many communities if it does not listen to local concerns during a consultation period, which is often much too short.

2.49 pm

Mr. Robert Syms (Poole)

First, I congratulate my neighbour, the hon. Member for Mid-Dorset and North Poole (Mrs. Brooke) on securing this important debate. Poole recently suffered a major blow with closures in Bourne Valley, Newtown, Hamworthy and Stert. The latest closure announced—it is out for consultation—is of the much loved Heatherlands post office just off Ashley road. I agree with what other hon. Members have said: the consultation is something of a sham. If we are at the start of a process that may end in the closure of many post offices, the consultation process should be far more robust and pay attention to the concerns of people on the ground.

I also agree with the comments about the morale of sub-postmasters. I think that most of them have concluded that there is not much of a future. There seems to be a lack of trust in the Post Office with regard to putting sub-postmasters' interests at the heart of things, so they are taking the package and running. One cannot criticise them for that, but it does mean a diminution in service for most of my constituents. I have many elderly constituents, and mobility is a very big issue. We receive all the standard letters, which talk about alternatives within 0.8 of a mile, 1 mile or 1.5 miles, but it is difficult for many of my constituents who are not mobile to get to local post offices. Post offices still provide important services for the community and are an important source of advice.

In Poole, many of my constituents are considering what is next and are very concerned about what the future will bring. The post office programme is happening at the same time as BT is closing many of its telephone boxes, so public services are tending to be substantially diminished. There is a general concern, and I hope that the Minister will be able to give us reassurances today.

I agree with the hon. Member for Mid-Dorset and North Poole that there are concerns, particularly at the Dorset County Association for the Blind, in respect of cash machines in post offices. The hon. Lady explained the concerns well. If the Minister does not have an explanation today, I hope that he will at least go away and consider the matter, because the community is concerned.

2.51 pm

Mr. Mike Hancock (Portsmouth, South)

I apologise to the Minister and my hon. Friend the Member for Mid-Dorset and North Poole (Mrs. Brooke) for not being present at the beginning of the debate. Like the hon. Member for Plymouth, Sutton (Linda Gilroy), I was at a meeting with a delegation from my constituency.

I am delighted to be able to take part in the debate, because a number of post offices are under threat in my constituency. Since 1 January, two have closed—that is, one has physically closed and another will close in a couple of weeks. I shall focus on the process of consultation. The Post Office informed me on 31 December that the Langstone Road post office was to close. Despite the fact that it was a holiday period, we were told that the deadline for consultation was 3 February. However, even though there were barely three weeks, more than 1,500 people signed a petition and hundreds of letters were written. All three parties on Portsmouth city council supported a campaign to keep the post office open, and there was widespread support for the campaign led mainly by the Portsmouth pensioners association.

Despite all that, and despite four attempts to get representatives of the Post Office to come to a meeting, all offers were declined until after it had announced its decision to close the post office. If we are to have consultation, why do not people come clean and say that it is a sham and that people should not waste their time campaigning? If the example of Langstone Road post office is anything to go by, no one else could come to any other conclusion. Those events were mirrored in the decision to close Castle Road post office in Portsmouth. The process was exactly the same, although I believe that even more people objected to that closure. Again, no effort was made to find a compromise or alternative properties in which to locate the post office.

My mind goes back to the succession of debates that we have had in the House over the past year and a half in which Ministers have given assurances that they would promote the sub-post office network and that efforts would be made to give people a proper choice in how their pensions and so on were paid. However, we have heard about the experience of the hon. Member for South-West Bedfordshire (Andrew Selous) at the call centre in Burnley, where he was told that the Post Office was the last thing to be mentioned when people sought advice.

I am convinced that the urban post office has a part to play in our communities. The constituency I represent is probably one of the smallest, although it may be one of the half dozen most densely populated in the country. The people suggesting that in a city such as Portsmouth a journey of half a mile across pretty major roads is not difficult for elderly people to contemplate have obviously never tried that journey on foot.

I have read the explanation for the various alternatives offered to people after the most recent closure. One suggestion is that there is an alternative post office 0.6 miles away along busy roads—but on level terrain. There is no public transport available. The other alternative is 1.5 miles away along busy roads—although crossings are available and the terrain is level. I do not know where the people who write that sort of letter come from, but they talk about elderly people or young mothers with their kids in a pushchair walking a mile and a half in a busy urban environment like the centre of Portsmouth. People who write such letters are completely out of touch with what the Post Office suggested it would have, which was an urban network of post offices that related to communities.

The two closures that have taken place in Portsmouth since the beginning of the year are the tip of the iceberg. Like other hon. Members I believe that the closure of urban post offices will accelerate. but in whose long-term interest is that? One group who will be sadly disadvantaged are the communities who want post offices to flourish. People will not use the post office unless the services it provides are services that they want. The Post Office does not do enough to attract customers into its urban sub-post office network. That is apparent to anyone who has seen how difficult it is for any sub-postmaster or sub-postmistress to get new attractions into their post office. There is resistance across the board to what they want to happen.

I am bitterly disappointed that we have had to have this debate again today. I believed the Government when they said that they would do all they could to sustain the urban post office network, but that has not been borne out by any of the evidence that they have provided. Again, I congratulate my hon. Friend the Member for Mid-Dorset and North Poole on securing the debate. I hope that the Minister will show slightly more commitment and that he will say that enough is enough—that the Government will do more to protect those post offices that are left and that we will not have any more sham consultations. He should not ignore 1,500 people, a unanimous city council decision or the groups that actively serve the community when they ask for positive consultation. Let no Post Office official ever again write to say that he will not come to a meeting until after he has made a decision to close a post office, but that he will come to explain to people where they can go in future. That is wholly unacceptable.

2.57 pm

Mr. Christopher Chope (Christchurch)

The hon. Member for Portsmouth, South (Mr. Hancock) and all those present for this debate and our constituents feel collectively that we are the victims of a Government confidence trick. The PIU report before the last general election made 24 recommendations, and in accepting them the Prime Minister said he would work positively to ensure that all sub-post offices were able to become government general practitioners. That is what he said before the general election. I raised the matter with him at Prime Minister's Question Time before I knew of the threatened closure of the Stanpit branch post office in my constituency. I accused him of bribing sub-postmasters with £180 million of taxpayers' money to close down their services". His response was: we are putting in a lot of extra investment so that those sub-post offices that can survive and that have a viable future are given one."—[Official Report, 6 November 2002; Vol. 392, c. 281.] The Stanpit post office had a viable future, but Ministers and Government policies have taken it away. When the Prime Minister referred to investment he really meant redundancy money. At £180 million, that works out at an average pay-off of £60,000 for each sub-postmaster.

This is a cruel confidence trick and the involvement of Postwatch merely increases the cynicism. What is the point in having a consumer protection body with no power to prevent the closures? It involves itself in consultation, but in the few cases in which it objects to the closure, such as the one referred to by my hon. Friend the Member for South-West Bedfordshire, and the case of the Stanpit post office—nothing happens. It is just an expensive process in which the poor consumer is the loser.

It is no wonder that the Prime Minister finds it difficult to sell his Iraq policy to the British people when on something as straightforward as the future of urban post offices, he is proved to be someone who uses words that are open to different interpretations. He has now lost the confidence of the people.

2.59 pm

Dr. Vincent Cable (Twickenham)

I congratulate my hon. Friend the Member for Mid-Dorset and North Poole (Mrs. Brooke), who has performed a useful service in giving local colour and flavour to a big national problem. What we are witnessing is a collision in slow motion, and we are beginning to see the casualties. Last week, I visited a local postmaster who is being paid up under the programme. He is being compensated for his business, but he is in his early 50s and has no prospect of an alternative livelihood. He has given up his life and holidays to serving the local community, yet he is embittered and feels a lack of support. There are many like him.

I shall focus on several specific issues. The first is the nature of the mass closure movement. As my hon. Friend the Member for Edinburgh, West (John Barrett) said, the concept of urban reinvention is a bit of a joke. Those who have some memory of how the story evolved will remember that, four or five years ago, a series of parliamentary questions were tabled by the hon. Member for Great Grimsby (Mr. Mitchell), myself and others about what ACT might mean to individual parliamentary constituencies. They were days when the Government and the Post Office were more open, and we received a helpful answer. We were told that the implications of losing the £450 million income were a 40 per cent. cut in the network of post offices and a closure rate of 70 or 80 per cent. in densely populated urban areas with low-income customers, such as inner-city Manchester and south Portsmouth.

The Government have now packaged those effects in what they call an urban reinvention programme, but we are seeing the direct logical consequence of that loss of income. We are supposed to be protected by provisions that ensure that post offices will be rationalised but remain open, and that 95 per cent. of people will have access to a post office within half a mile. However, the contributions of the hon. Members for South-West Bedfordshire (Andrew Selous) and for Christchurch (Mr. Chope) and of my hon. Friend the Member for Portsmouth, South (Mr. Hancock) explained the problems. There are problems of logistics, as half a mile up a steep hill is not the same as half a mile on the flat, and half a mile across dual carriageway is not the same as half a mile across a park. People could be switched to a post office that has different opening hours, is congested or does not offer a full range of services. There will be many other problems, such as people with walking difficulties being directed to a post office without a car park.

There must be a proper mechanism to ensure that when such difficulties become apparent, there will be a legitimate system of appeal and discussion with the authorities. For reasons that have been given, particularly by the hon. Member for Christchurch, the Postwatch mechanism is not strong enough—indeed, the situation is worse than that, because a deliberate attempt is being made to conceal information. For the past few months, I have been trying to get the Post Office to give me a list of the post offices that will be closed. There is no reason why it should not give me such a list. If we had it, rather than simply deal with problems case-by-case as they arise, we could map a picture of how our areas will be affected and make rational judgments about which closures to support and oppose.

The Post Office has refused to give me the information, but it is available. It has been given to Postwatch, but it will not pass it on to us. I have asked the Post Office the reason for that, and it said that it is obliged by a code of conduct to give Postwatch the information, but it is not obliged to give it to us. At some inconvenience to itself, Postwatch has agreed to give me and other hon. Members the information, but why is the Post Office—in effect, a Government operation that is funded by £400 million of taxpayers' money—operating in such a high-handed, arrogant and unco-operative way? I have written a rude letter to Mr. David Mills about that, but the Minister should take the point to heart. The Government are paying for the programme, and the Post Office is a public service. They should insist on more transparency.

Mr. Robathan

I have similar problems. I have been trying to find out from the Post Office which post offices have closed in each of the past few years. It said that it does not know and that it does not hold such details centrally. That must be nonsense—every organisation must know what outlets it has.

Dr. Cable

The answer is that the Post Office does know, but providing the information would be too inconvenient. There is no more to it than that.

Eighteen million consumers face a major social change. The Minister, for whom I have a great deal of respect and who usually handles his brief extremely well, managed to insult most of our constituents by responding to a question on consumer impact by saying that this was merely getting rid of ration book technology and that people should get up to date. People have positive reasons for choosing to use the Post Office system, but at present there is an enormous disconnection between people's clearly expressed preferences and what is happening.

The National Federation of Sub-Postmasters recently commissioned a very professional survey through MORI to ascertain what consumers wanted. The results were clear: only 6 per cent. of pension and benefits recipients who have a current account said that they would prefer to get their benefits by ACT. It also found that more than 93 per cent. of people who have a bank account and 83 per cent of those who do not said that they would prefer to continue to receive their pensions and benefits in cash rather than by ACT. That is an 80 or 90 per cent. preference. However, that preference is not being responded to. I received a letter this morning from the Under-Secretary of State for Work and Pensions, the hon. Member for Croydon, North (Malcolm Wicks), giving me the latest figures on the take-up of the Post Office card account. Of 215, 000 replies, only 16, 940 requested a Post Office card account. That is only 5 per cent. What happened to the 80 or 90 per cent. who wanted to have this system but who have not requested it? That is odd.

Thanks to my hon. Friend the Member for Mid-Dorset and North Poole, we had part of the explanation. First, the process of getting the cards is extremely complex and difficult—requesting the personal invitation documents, presenting them, and going through the application process. We also know that people have been actively discouraged. Whatever tactful words Ministers may use at the centre, we know that junior officials further down the departmental food chain have been told that they must get the numbers down—that that is their job. Some of them have been quite abrasive in going about it. People have told me that they have been threatened—"Get into the bank or you will lose your benefits or suffer delays in your payments." Little sensitivity is shown at that level.

People have been discouraged in other ways. Department for Work and Pensions promotional literature makes it clear that there is a preference for a bank account. The Inland Revenue, when talking about tax credits, does not even give people the option of having a Post Office card account. Of course, it is clear that the Treasury is driving that blatant and cynical attempt to discourage people from using post offices.

Linda Gilroy

Does the hon. Gentleman accept that it is incumbent on us to ensure that our services are delivered at the lowest possible cost to the taxpayer?

Dr. Cable

Yes. In her contribution, the hon. Lady acknowledged that there has been discouragement in Plymouth. She is correct to say that a more efficient system of electronic transfer would create savings. That is why we cannot simply make appeals to keep the old system going. We must find new sources of income for the post office network.

Several hon. Members asked about what had happened to the Government's promise to introduce a general practitioner system. We know that "Your Guide" was trialled and that it was a success. However, the Government decided not to back it. However, we were left with the thought that the Government saw merit in providing a general practitioner information service through the post office network. Perhaps the Minister will tell us what happened, as such a service would help to make the network more viable. Can the Minister tell us what is being done to make more use of the post office network to encourage electronic commerce? That could generate additional income. There is enormous potential synergy between large numbers of people coming into their post offices to use technology to order goods and to use post offices for delivery. The Post Office offers a good logistics system, but little is being done by the Government to promote it.

The hon. Lady is right to say that the future of the post office network must have a sound economic foundation. We are not asking for indefinite subsidies, but there are other ways to achieve that. However, since the PIU report was published, the Government's approach to alternative sources of income has been wholly passive.

Finally, I wonder about the readiness of the system. I understand that the electronic payments system that underpins the Post Office card account was to have been trialled three months ago, but that the trials are still taking place and are not due to finish until a mere five days before the new system comes into effect. That is contrary to all good practice with complex IT systems. We know that the IT systems used in Government Departments have been chaotic and unsuccessful. I want some assurance from the Government that the electronic underpinning of the Post Office card account system is properly organised and fully ready for D-day.

3.10 pm

Mr. Andrew Robathan (Blaby)

Mine is the 10th speech in this debate, and I suspect that none of the speeches have given the Minister much comfort. I congratulate the hon. Member for Mid-Dorset and North Poole (Mrs. Brooke) on initiating the debate. It is probable that almost everybody will have agreed with everything said in all nine speeches—and probably in the 10th—because we all come to the subject from the same position.

We are talking about a sustainable future for all post offices, whether Crown, rural or urban. We have heard how communities value post offices. However, they face a crisis. The world is changing and more people will use ACT, but the crisis is happening now. At least 40 per cent.—it was suggested a moment ago that it is 45 per cent.—of post office network revenue comes from the payment of benefit transactions. That will be scrapped over the next two years from April. The question is what will happen then.

The urban deprived post office fund will do a little to help. Hon. Members may recall that the Office of the Deputy Prime Minister expected the fund to become operational in the summer of 2002, but it was finally announced on 30 December. Another £150 million a year for the next three years will be available for rural post offices. That will have an impact, of course, but what then? The cynics will say that those three years will take us neatly past the next general election.

What is the sustainable future for the post office? The hon. Member for Mid-Dorset and North Poole spoke about the bias against the Post Office card account. Some may not know that there has been a spat between the DTI, which looks after the Post Office, and the DWP, which provides the money to pay the post office network—backed, of course, by the Treasury. The DTI lost the argument, because the purpose of changing benefit payments is simply—and understandably; I do not knock it—to save public money. It will save between £400 and £430 million a year. If that money is taken from the post offices—ACT will cost the DWP next to nothing—what will the post office network do for income?

I reiterate briefly the journey made by the Post Office card account customer. It is about how people can be deterred from asking for a card account. The first stop is that the customer gets a letter asking him to supply some account details; no further action is required. However, those who do not supply account details have a further 18 further steps to take before being given a Post Office card account. The form is designed specifically to ensure that people can receive their payment anywhere so long as they choose ACT.

Documents from the DWP make no mention of a Post Office card account, nor do those from the Inland Revenue. They have no box to tick, and do not include a question asking whether people want a Post Office card account. Sub-postmasters have been forbidden to advertise them, and they are not allowed to market them. The Post Office card account is third on the list of options that will soon start appearing in post offices.

A parliamentary question was answered yesterday by the Department for Work and Pensions about housebound pensioners accessing Post Office card accounts. It said that some housebound pensioners might find that a bank account may be better to meet their personal needs. Yet again we are being pushed in that direction. I would say that they should be allowed to choose. A letter from the Veterans Agency, which is part of the Ministry of Defence, states: Additionally, we have had so many requests for this option"— that is the Post Office card account— that it may take us time to respond to all the requests…please rest assured that this does not mean we have not actioned your request, it simply means that due to the high demand, it will take some time to take the required action of 23,000+ requests. So, people do want Post Office card accounts. I say to the Minister that he should let them choose.

Child benefit was one of the first benefits to be transferred to universal banking. Will the Minister tell us what concerns have been expressed to him about the money that is intended to benefit children going into joint bank accounts? He and I are of an age, and he might recall the debate some 30 years ago, when there was a concern that feckless and possibly drunken husbands or partners might get their hands on the money and waste it. That is the main reason why it is always paid to the mother. Has the Minister any such concerns? Perhaps society is so much better now that there are no deprived or excluded mothers who might suffer.

I was glad to hear the four Liberals who have spoken so well, especially the Minister for Twickenham—I am sorry, the hon. Member for Twickenham (Dr. Cable); that was not a Freudian slip. I disagreed with very little that he said. I was glad to hear of his support for the Post Office. The Liberals are good at campaigning and we all know their campaign pack, which says: The last post? Start campaigning now and just keep going! It is a cracker and received a massive response. The pack continues: 'Our…post office is…vital,' say the residents of Bloggstown. …There has been a massive response to the Lib Dem campaign to save local Post Offices".— although it has yet to start— 'Both locally and nationwide the Liberal Democrats are getting a very positive response to our campaign,' said Joe Bloggs".

John Barrett

Will the hon. Gentleman comment on how that fits in with the Conservative campaign in Dumfries and Galloway, which is being run on almost the same lines?

Mr. Robathan

I am sure that that is an excellent campaign, but it does not contain junk like this: We have had an excellent response to our campaign, with hundreds of local residents signing the petition…Post Office campaign heads for Downing Street. That is the stuff. And then, wonder of wonders, it is designed to be printed as a double sided A5 election day leaflet. It should be delivered to supporters (and those we are squeezing)". I should like to tell the hon. Gentlemen and Ladies of the Liberal Democrats that that was designed for last May's local elections when we won a seat from them in Gilmorton, notwithstanding all that junk.

Nevertheless, Liberal Democrats have made many good points. The issue is the future of the Post Office. The PIU report of some 32 months ago was welcomed by the Prime Minister with the words, I welcome this report which the Government fully accepts."—[Official Report, 15 October 2002; Vol. 390, c. 240.] The problem is that it has not been enforced. There is no e-commerce, there are no one-stop shops, there is no internet learning and access. Loyalty to the post offices around the country, of which we have heard today, is remarkable. They are valued by people in all communities, even though they might not always go into them. I went to Lutterworth post office last week during constituency week and the sub-postmaster told me now concerned he was about his future. That is a big post office in a big town. I heard, also, that people who had applied for Post Office card accounts, although they had given no telephone number, were being telephoned by the Department for Work and Pensions to ask them whether they really wanted them.

What is the future? Everybody wants to know. The Government should come clean. What are the long-term plans? After the next election, and after £450 million has been spent, what then? Will the Minister tell us about the discussions between the National Federation of Sub-Postmasters and the Post Office that are going on now? I understand that they are completely bogged down because there can be no agreement yet about how much money can be awarded for each benefit transaction, or financial transaction, for a card account. He will say that it is not his responsibility, but I fear that it is. We know that the problems of the post office network are huge. However, it is a great asset, with over 17,000 outlets, reducing under the urban network reinvention Programme to 14,000 or 15,000. It offers a great opportunity for a dynamic retailer and we all wish to see the post office network continue. Sub-postmasters, the public, towns, villages, pensioners, mothers and everyone else who ever uses a post office want to know what the long-term policy is. What is the sustainable future? We are talking about a publicly-owned asset, funded by public money. We want to know whether the post offices in question will still be here in 10, 20 or 30 years.

3.19 pm

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

I too start by congratulating the hon. Member for Mid-Dorset and North Poole (Mrs. Brooke) on securing the debate. It has been an excellent, useful discussion and, as she said, very timely. The issues raised are relevant to almost every Member of the House. There are very few who will not be affected to some degree by the unfolding of the programme.

The hon. Lady was helpful in providing an example of how the process is supposed to work. She agreed that the Hillbourne post office in her constituency should close, and she described the process, which worked well. I think that her one disappointment was that she did not see evidence of the improvement in the remaining post offices that should be an important part of the process. Applications for funding under the investment grant scheme are now being made, and we shall begin to see the benefit of those investments. Whether any are progressing yet in her area I do not know, but the opportunity exists. As a result, improvements will be made leading to the bigger, brighter, better post offices that everyone agrees are the right way forward for the network.

I do not accept the charges of deception made by my hon. Friend the Member for Manchester, Central (Mr. Lloyd). I am sorry that he used that term. He might be right about the inelegance, another of the terms that he used, and I shall certainly look into the points that he—and, indeed, my hon. Friend the Member for Brighton, Pavilion (Mr. Lepper) and the hon. Member for Portsmouth, South (Mr. Hancock)—raised about the process. The examples that those hon. Members gave do not sound to me like instances of the process working as it should. Nevertheless, I am grateful for the example provided by the hon. Member for Mid-Dorset and North Poole of the process working properly. Both the Government and the Post Office intend that her experience, rather than the one recounted by some hon. Members who have spoken, should be the common one.

Central to our policy is the need to maintain a viable nationwide network of post offices, accessible in every part of the country. The process of rationalisation and modernisation in the urban network will involve some hard choices and some disappointments, but the process is essential, if we are to achieve our objective and strengthen the viability of the urban network in the changed business conditions in which it operates.

I welcome the remarks of my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy). We had a useful discussion with the sub-postmasters from her constituency who came to see me. My hon. Friend made several helpful suggestions, including the one about the Small Business Service, which she has, I know, raised with the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths), who has responsibility for small businesses. That approach may well be very useful. I am grateful to the hon. Member for Twickenham (Dr. Cable) for his kind remarks about the way in which I discharge my duties. I should like to reciprocate with a compliment to him, but I do not apologise for what I said about moving beyond ration book technology. The successful network of post offices that we all want will have to be based on good technology and modern services provided in ways that meet today's needs, not on simply continuing to use systems that were invented in the second world war, when ration books were in use.

I do not agree with the hon. Member for Mid-Dorset and North Poole that we should delay change. It is essential to proceed. I expect the card account to be available in April as has always been planned. We shall over a two-year period transfer benefit recipients on to the new arrangements in a carefully planned way. That will certainly be a case of very good practice in implementing an IT system, drawing on the lessons learned from the past. My hon. Friend the Member for Plymouth, Sutton gave some figures showing that if the Post Office tried to continue by simply carrying on doing things as it has always done them, especially in its benefit business, but in other respects as well, it would dwindle and its turnover would decline. Instead, it needs to use new technology. We have invested £500 million in technology for the Post Office to ensure that it has a viable and attractive future by offering services, especially banking-based services, which the new technology will allow.

The hon. Member for South-West Bedfordshire (Andrew Selous) spoke about the case of the Downside post office in his constituency. He raised some persuasive points in his contribution, and he has, as he said, already raised the matter with me. I am not in a position to comment on the circumstances in his constituency, but I tell him that it is essential that the observations of Postwatch are weighed very seriously indeed in the process. That is not only my view, but that of Post Office management as well. The hon. Gentleman made an interesting point about the possibility of the post office moving into the newsagents next door. I shall pursue the points that he made.

The hon. Member for Christchurch (Mr. Chope) was rather less thoughtful and constructive in his contribution. Unlike him, we take the view that when sub-postmasters choose to leave the network because they can see that their business is dwindling, it is right that they receive a payment in compensation. The hon. Gentleman suggested that the payment in question was rather large, and he talked about it as a bribe. However, that payment is what the postmaster would have expected to get if he sold his business two or three years ago. That is a fair payment for people who are leaving the Post Office, and who, as the hon. Member for Twickenham said, have served their communities for a long time. However, in addition to the funding that we have provided for that, we have also made available up to £30 million for investment in improving the post offices that remain. Applications to that fund have now started to come in.

Mr. Chope

Does the Minister accept that that must be matched funding? In the case of Stanpit post office, the Purewell alternative was told that its facilities were adequate already, so it would not qualify for any additional funding. Furthermore, if the objective is to encourage people to visit post offices, why are the Government discouraging people from using the Post Office card account?

Mr. Timms

The hon. Gentleman is wrong on the second point, but on the first point, there does need to be matched funding from the postmaster. That is absolutely right. The real boost to the post offices that are left is that they will gain additional customers from the post offices that are closing. Given the prospect of more business and the offer of a grant, it is reasonable that postmasters should be asked to make a contribution towards the cost of that expansion. I expect that offer to be widely taken up.

On the hon. Gentleman's second point, we have been clear right from the start of the process that everybody who wishes to continue to receive their benefits in cash at the local post office every week will be able to do so, either through an ordinary current account or through one of the new basic bank accounts that are becoming available, which can be fully accessed at any local post office, or through the Post Office card account. People can choose the option that suits them best.

A number of hon. Members talked about the PIU report, which started the debate and which the Government entirely accepted. It is important to recognise why the urban post office needs restructuring and why the income of the Post Office network has declined. The reasons date back over a long period. Past under-investment is certainly one factor, but greater mobility and changes in shopping and financial habits have also sharply reduced customer numbers.

The hon. Member for Edinburgh, West (John Barrett) said that the Post Office had the biggest retail network in the country. Actually, the Post Office has the biggest retail network in Europe. The network is very large indeed and is highly trusted, which is one of the Post Office's great assets and a reason why I am very optimistic about its future commercial prospects. Other networks, such as those of the retail banks, have also been scaled back, and post office networks in other countries have been through similar changes. I understand that in Germany, consistent profitability of the post office network has been achieved by reducing the number of post office branches from 30,000 to 13,000. That reduction goes a great deal further than is proposed in the UK. Other countries have also embarked on a similar process—

Mr. Deputy Speaker

Order. Time is up.