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Post Office Closures

The Government set the financial framework but we do not make decisions about individual post offices, as I am sure that the hon. Gentleman understands—that is a matter for Post Office Ltd. If the Post Office operated on a purely commercial basis with no external subsidy of the kind that we have allocated, it is estimated that up to four times more branches could be under threat than under the current programme. However, the Government do not take the view that this is purely a commercial service, which is why we have committed such a large public subsidy to the Post Office and why we are working with it to secure a more stable network for the future. That was recognised by George Thomson, the general secretary of the National Federation of SubPostmasters, who recently said that"““although regrettable we believe that these closures are necessary to ensure the remaining post offices are able to thrive in the future.””" Let me set out some of the current challenges faced by the post office network. Post Office Ltd has been losing money for some years now, and those losses ran at about £3.5 million a week last year. Four million fewer people visit post offices every week, compared with just two years ago. Eight hundred post offices have fewer than 16 customers a week, and each transaction in those offices costs the taxpayer about £17 in public subsidy. Some 1,600 offices have fewer than 20 customers a day, and the subsidy per transaction in those offices is about £8. In urban areas, 1,000 sub-post offices are competing for business with at least six other post offices within a mile of them, and at a time when the overall number of customers has been falling. The Post Office is also being challenged by lifestyle change. Eight out of 10 pensioners have their pension paid into a bank account, and the figure is nine out of 10 among new retirees. Last year, half a million people a month renewed their car tax online, but a million people a month have done so this year, with almost half of them doing so outside the normal office hours of nine to five. Other changes, such as direct debit and competition from those offering bill payment services, for example, also have an impact. Reference has been made to Government decisions on these fronts, but the Government have a duty to respond to trends in the way that people expect their money to be paid to them. There is also the legitimate issue of the public purse. It costs 1p to pay a benefit or pension into a bank account, but 80p to do so through the Post Office card account and £1.80 a time to do so using a girocheque. Do we really believe that any Government will reverse the trend toward putting services on line so that people can access them 24 hours a day, and go back to girocheques that cost £1.80 a time, with the increased risk of fraud that that would entail? I was asked about the future of the Post Office card account. There will be a successor product but the Government cannot legally just allocate it to the Post Office, which is why it is out to tender. The Post Office is bidding and we believe that it is in a strong position, but there must be a tendering process involving the competition that is out there, whether the hon. Gentlemen like it or not. The challenge to the Post Office is real because of lifestyle changes and competition. Of course, not everyone is online and not everyone is gaining access to services, paying bills and receiving money in that way, but millions are, which inevitably affects the way that people access Post Office services. The trends that I have described will not go away; they will probably intensify. I do not believe that the future for the Post Office can involve a call to turn back the clock. Instead, it will be a question of giving people new reasons to use it, and of providing services that make it a local provider of choice. I still think that the Post Office will have great strengths. Even after the closure programme, the network will be bigger than that of all the banks put together, and about three times bigger than that of all five of the biggest supermarket chains put together. It will still have an unparalleled reach into every corner of the UK. The Post Office has been rising to the challenge of innovation and the development of new products. It is now the biggest provider of foreign exchange in the country; it is a major provider of car insurance; it has launched a new broadband service in partnership with British Telecom; it is introducing 4,000 free-to-use cash machines; and it has recently, and perhaps topically, announced a new, secure Christmas pre-payment scheme, aimed at Christmas 2008, which will be in full operation next year. That is the road that the Post Office must travel—providing new services and new reasons to go to it, all based on a trusted brand. At the same time as the closures are happening, Post Office Ltd will open about 500 new outreach services in outlets such as community centres, retail outlets and mobile post offices, all of which could help to mitigate the consequences of the planned closures in some areas.