Urban Post Offices

- Tuesday, 15th October 2002

 

 

Urban Post Offices
15/10/2002
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Urban Post Offices
Mr. Peter Lilley (Hitchin and Harpenden): As time for the debate is disgracefully short, I shall try to make just three points about this strangely named and very costly measure.
First, when the Government announced that it would be compulsory for pensioners and other vulnerable people to have their pensions and benefits paid into the bank rather than through the Post Office, they pretended that they could save taxpayers‘ money and still maintain a comprehensive network of sub-post offices. The measure demonstrates that they were wrong. They should have known that they would be wrong. As Secretary of State, I was advised that if we moved in the direction of making compulsory payments through the banks, that would lead to the collapse of the sub-post office network, unless we decided to subsidise it, in which case the subsidies would absorb most, if not all, of the savings that we hoped to make.
Although I have given them the opportunity, the Government have never denied that they received similar advice from their officials. They should have realised that they were faced with that dilemma, because post offices benefit in two ways from their contract to deliver benefits from the Department for Work and Pensions. They receive ?400 million as payment, and they receive many millions of pounds of extra trade from people who enter their post offices and spend their benefits in them. The Government can therefore make good the loss of revenue from cancelling the contract only by paying out more than they are saving by withdrawing the ?400 million.
My second point is that if the Government are reluctant to do that, as they clearly are, they are faced with the collapse of the sub-post office network. They are trying to conceal that collapse not by reinventing the network, but by reinventing the English language. They have replaced the word "closure" with "reinvention". They propose to reinvent 3,000 post offices as fast food chains or estate agents‘ offices or by returning them to residential use. They intend to reinvent 3,000 sub-postmasters and sub-postmistresses into early retirement by paying them to give up their franchises. They are going to reinvent many thousands of people who work in those post offices by taking away their jobs and reinventing them into unemployment. That is what the Government‘s strange wording means, and we should have no truck with it.
Meanwhile, as well as closing 3,000 of the 8,000 urban post offices, according to the Postcomm survey, over the past 12 months rural post offices have been closing at three times the rate of urban post offices, and 74 per cent. of post offices which have closed over the past 12 months have been rural post offices.
The third point is that the Government are still a long, long way from closing the financial gap that they have opened up in the viability of the post office network. The Consignia document that was sent to us a year or so ago states that the gap is ?500million. Consignia said that it could make good ?100 million of that money by closing stores and reducing operating costs. Presumably, the Government‘s way of helping Consignia to achieve that ?100 million saving is the paying out of up to ?210 million in the early years. I do not understand their arithmetic; they talk about a figure of ?10,000 for each post office, but the closure of 3,000 stores at a cost of ?210 million is a cost of ?70,000 each. If the amount is spread evenly among all 8,000 post offices, the total is ?26,000 each. Will the Minister explain the bizarre arithmetic of the proposal? Anyway, at the end of the day, there is an ongoing saving of ?100 million.
The Post Office said that the Government gateway, which has since been rechristened several times in Blairite fashion, was going to raise ?80 million a year. We are now told that it does not raise anything and costs more than it saves or generates in income, and it has disappeared. We were told in press releases that the universal bank would cost the banks ?180 million, so we hoped that the money would go into the sub-post office network. On closer inspection, it turns out that there is a five-year period and that the amount is ?36 million a year. As the National Consumer Council points out, that is effectively a cost to bank users and a form of taxation without legislation. Anyway, ?36 million a year is a small amount. The only other sum that the Post Office quantifies relates to its conversion into a total distribution system, whatever that means. That will generate all of ?6 million a year in extra revenue.
Whence will the extra money come to fill the ?500 million gap? Newspaper reports over the weekend or yesterday said that the Government were going to put ?450 million into rural post offices. We are not discussing that issue today, but if the Minister has leaked the information to the press, we would at least expect him to tell the House whether there is any truth in the assertions and whether, as the newspapers reported, ?150 million a year for three years is to come from the Government in taxpayers‘ money. Perhaps he no longer holds himself accountable to the House and we are to be informed of such issues only through nods and winks to the newspapers.
The truth is that the Government have foolishly entered into a policy that is not compatible with the objectives that they have set themselves. There will be either minimal savings or maximal closures, and certainly great distress and inconvenience to pensioners and vulnerable people in all our constituencies. That is why many thousands of people in my constituency have signed petitions urging the Government to reconsider this daft and damaging policy.
15 Oct 2002 : Column 249-251

 

 

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