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10 Mar 2003 : Column 135—continued
10.25 pm
Tom Brake (Carshalton and Wallington): I should like to thank my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) for giving me the opportunity to speak in this debate.
Post offices are a lifeline in many rural communities, but their value to urban and suburban communities should not be underestimated either. When it seemed that Roundshaw post office was going to close, local people, many of whom do not have access to a car, were distraught. Fortunately, that particular battle has been won, as a very sensible solution was arrived at involving the post office sharing space with a new supermarket.
I am glad that we won that battle, but what alarms me is that there are other battles to be fought regarding future local post office closures and we do not know where the enemy lines are or what the rules of engagement are. We hear rumours that a particular post office may be under threat of closure, but as the Post Office is not forthcoming with its planned programme of closures, such rumours cannot be disproved or confirmed.
That is why I shall ask the Minister just one thing—to guarantee that there will be no more post office closures in the borough until a meaningful consultation process is put in place that will allow residents to put their case in a meaningful way. That is the guarantee that my constituents and those of my hon. Friend are seeking and that I hope that the Minister can deliver.
10.27 pm
The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms): I congratulate the hon. Member for Sutton and Cheam (Mr. Burstow) on securing this
debate. I know that he is assiduous in his attention to issues that are relevant to elderly people in particular, and I welcome the opportunity to respond to the points that he and his hon. Friend the Member for Carshalton and Wallington (Tom Brake) have made during this short debate.Both hon. Members set out the concerns of their constituents about proposals in their area. The hon. Member for Sutton and Cheam referred to the proposed closure of Oldfields road post office. That proposal is indeed part of the Post Office's programme for restructuring the urban post office network. I understand, however, that the proposal for that particular office has been suspended to enable Post Office Ltd. to recheck some of the data relating to it. Once that has been done, it is envisaged that the consultation will start again from scratch. It is helpful that I can point to that fact, which makes it clear that, contrary to what he said, the process is not on tram lines, but is being taken forward very carefully and in a very thoughtful way in order to ensure that the integrity of the post office network, and access to it in every part of the country, are maintained.
Mr. Burstow: On the notification of the suspension of the consultation process, can the Minister indicate when the decision was made?
Mr. Timms: I am afraid that I do not know exactly when the decision was made. I understand that the data on the closure that have been published and put into the public domain were correct and accurate, but that some of the information supplied to Postwatch was not. The Post Office took the view that it should do the right thing, check the data and then go right back to the start of the consultation process, which helpfully, from my point of view, demonstrates that the process will be fair and proper, as it should be.
The rationalisation and modernisation of the urban network is part of the process of maintaining a viable nationwide network of post offices. We need to go through that process if we are to maintain a good level of accessibility in every part of the country and provide a wider range of better quality services to post office customers, as we must. Both hon. Members complained about the proposed closures, but they did not suggest alternative closures. For the reasons that I am about to set out, it is essential to reduce the number of post offices.
It was a key recommendation of the performance and innovation unit's report about the future of the post office network, which was broadly supported by Liberal Democrat Members, that if the Post Office decided that fewer offices were needed in some urban areas, the Government should consider providing financial assistance to the Post Office to ensure that the sub-postmasters affected could be adequately compensated for the loss of value of their business.
Last November, following parliamentary approval of the funding, Post Office Ltd. initiated its programme. I should emphasise that the development of closure proposals, the consultation process and subsequent decisions on closure are operational matters for Post Office Ltd. rather than for the Government. However, it is important that the process be undertaken properly and thoughtfully, and, in particular, that the consultation should be well managed.
It is important to understand why the post office network in urban areas needs restructuring and why its income has declined. The reasons go back over 20 years. Past under-investment is certainly one factor, but greater mobility and changes in shopping and financial habits have also sharply reduced customer numbers. Of course the Post Office is not alone in having had to deal with such changes; other networks, such as those of the retail banks, have been scaled back as well. Post office networks in other countries have been through similar changes; for example, I understand that in Germany, to achieve consistent profitability, the number of post office branches was reduced from 30,000, a much higher number than in the UK, to 13,000, significantly lower than the current UK number. Many other countries have embarked on a similar process.
Some factors have had a particularly big impact in the UK. Post office income here has been heavily dependent on benefit payments, but over 42 per cent. of benefit recipients now access their benefit payments via bank accounts, compared with only 26 per cent. in 1996. That substantial reduction results from people changing the way in which they want to keep their money.
If we compare the 2001–02 financial year with that of five years previously, we find that the number of retirement pensions and widows benefits paid by order books and giros had dropped by more than 1 million, from just over 6 million to fewer than 5 million, even though the total number of pension recipients went up by more than 1 million. Child benefit payments made in that way dropped from just under 5 million to fewer than 4 million. Payments of incapacity benefit at post offices fell even more dramatically, from more than 2.5 million to fewer than 1 million. All that was the result of decisions made by benefit recipients.
Mr. Burstow: Will the Minister consider the principal concern that my hon. Friend and I have put to him tonight—the piecemeal nature of the process that we have seen in our borough so far, which means that we are unable to see the totality of the plans and therefore to comment on them intelligently on behalf of our constituents? The plans proposed closing the Collingwood road branch and cited Oldfields road as being available, but now that is closing as well.
Mr. Timms: I shall certainly address that issue. It is important, however, that I set out for the House why the process is necessary, and, indeed, in the interests of our communities and of the post office network.
The number of people receiving their benefits at the post office has sharply fallen. The total number of people receiving jobseeker's allowance has fallen, which is good news, but that has reduced post office income. Girobank transactions at post offices fell by 37 per cent. between March 1997 and March 2002. National Savings transactions fell by 24 per cent., telephone bill payments by 25 per cent. and postal orders by 13 per cent. Those reductions have been only modestly offset by increases in the number of transactions for motor vehicle licences, lottery sales and bureau de change services.
The consequence is that in the constituency of the hon. Member for Sutton and Cheam and many urban areas throughout the country, there is now too little business for the number of post offices. The Post Office
has the biggest retail network of any organisation in Europe, with 50 per cent. more branches than all the UK banks put together. More than 1,000 of the 9,000 urban sub-post offices have at least 10 other post offices within a mile. The volume of business through the network is simply no longer sufficient to support so dense a network.The Post Office programme is intended to restore the urban network to commercial viability, which all of us want to achieve. It aims to restore the confidence of the sub-postmasters, making it possible to attract much needed new investment. Earlier this evening, with my right hon. Friend the Deputy Prime Minister, I met a deputation from the National Federation of Sub-Postmasters. The federation has recognised and made it clear that
- "There is an urgent need for re-structuring . . . Tough decisions must be made in order to ensure a viable network for the future to create bigger, better and brighter post offices."
The programme relates only to the urban network. Our commitment to ending avoidable closures in the rural network remains, and in the last quarter of last year the net closure figure for rural offices nationally was nil—the first time that anyone can remember there not being a reduction in numbers. However, Post Office officials will progressively visit every urban area to make a careful study of the configuration of the offices and of local factors such as public transport availability, demographics and geography in order to decide whether a particular office that the postmaster wishes to close can be allowed to do so.
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