Royal Mail

My Lords, as has just been mentioned, one of the areas where there are the strongest concerns amongst ordinary people about the future of the post office is in rural Britain. In many of our villages and market towns, post offices are an essential part of the fabric of the local community. They are seen as a trusted source of advice on, and provision of, a whole range of government services. Apart from anything else they provide the crucial access to cash and banking services for those who are financially excluded or for those who still depend on the post office for their benefits or pensions. Furthermore, they produce a significant economic boost to their community. Countryside Agency research has shown that a shop attached to a post office can on average expect to receive a 25 per cent higher turnover as a direct result of the post office being there. Meanwhile, neighbouring shops get a 15 per cent boost to their turnover because of the footfall created by post offices. However, a village post office and shop does more than provide vital services for locals. They often represent the only focal point for day-to-day social intercourse within a community. While the church and village hall—if they exist—obviously host specific occasions, these are often narrow in their appeal: the young go to discos, for instance, while the old might go to whist drives. But it is only in the local post office and shop that old Mrs Smith can meet and chat to young Master Jones in an unstructured but secure setting. The fact that old Mrs Smith and young Master Jones might both be without transport and are therefore totally dependent on the post office and its shop also helps bind them together. Country people feel very strongly about their post offices. I asked a lot of people at the last Countryside March if there was any reason apart from hunting that had brought them to London, and post office closures was the most frequent answer. Indeed, it was soon after this that the Government introduced their £150 million per annum support that is now due to last until 2008. At the same time the Post Office introduced its commitment to prevent avoidable rural post office closures. Unfortunately, this latter commitment is due to lapse in March this year. However, neither of these two lifelines has prevented rural post offices closing, but they have slowed the annual closure rate down from 360 per annum five years ago, to 97 last year. So we should not delude ourselves. For the foreseeable future rural post offices will continue to close and this closure rate will almost certainly accelerate when the £150 million per annum ends in 2008. No one could expect such a large sum to continue after that. Postcomm research has found that almost all rural post office branches cost more to run than the revenue they bring in. Those that do not are in the larger towns. However, the benefits to local people in 80 per cent of rural branches are greater than their costs, even if those branches are making a loss for Post Office Ltd. This, of course, means that in 20 per cent of branches—that is, some 1,100 post offices—the benefits to locals do not outweigh the costs of operating them. It is likely that these branches will not survive in the long run unless the local communities can galvanise some local self-help. Meanwhile, in the UK, Post Office Ltd is using its window of opportunity, and the extra funding it is getting, very well it seems to me. It has created a rural strategy team to help run and measure a whole range of pilot schemes to show others how it is possible to sustain the rural network. For example, it has a ““core and outreach”” scheme which is running several satellite operations involving a sub-postmaster from a larger village going out to surrounding settlements, for a few hours a week, and offering all the services of the core branch. He can do this by using a village hall, pub or even a church. In other instances, mobile post offices have been used. For example, the Cumbria mobile travels around 500 miles a week serving 36 isolated communities. Post offices have also combined with other services to reduce fixed costs. For instance, in Dyfed and Norfolk they have combined with the local police force. In Cornwall, where over 25 per cent of wage earners are self-employed, Post Office Ltd has combined with Business Link to offer business support services along with normal post office services. In the ““pub is the hub”” initiative you can now find a post office, a village shop and even Internet café facilities and training in pubs. Post offices can also now be found in almost any type of shop, including in one case a fish and chip shop, but also elsewhere in hotels, churches, libraries, tea rooms or even the opticians; and long may it continue. In conclusion I would like to make the following points. First, rural post offices fulfil a valuable social and economic role and should continue to receive government support, albeit at a reduced rate, after 2008. It is the most vulnerable members of our communities who will be affected by any future rationalisation, such as older people, those without access to a car, the unemployed and those on a low income. Postcomm research on post office networks abroad showed that many countries find it necessary to adopt special approaches to secure postal and other services in rural areas. Secondly, the current commitment to prevent avoidable rural post office closures is due to lapse in March 2006. I suggest that this should not happen until a strategy for the future of the rural network has been fully developed and publicly consulted on, so that there is a plan to go forward based on sensible criteria. This criteria could be related to population size, distance from other outlets or where particularly vulnerable groups predominate; but we must have a plan before we pull the rug. Thirdly, the provision of postal services should continue to be encouraged alongside other services in rural areas, and post office regulations must remain flexible to accommodate that. Government funding and support should continue to encourage a climate for such entrepreneurial activity by giving business rate relief, pump-priming capital grants and, crucially, sponsoring advisers and consultants to help entrepreneurs and rural communities. Communities need to be able to develop the range of services that best suit them. Many successful and long-lasting community post offices already exist, assisted by the Rural Shops Alliance and the Plunkett Foundation, among others. Those organisations will continue to need help. Fourthly, it was no surprise to me, looking at the research in other countries, that the main strategy adopted in most of them has been to develop banking and financial services. One of the main problems with rural post offices recently has been the muddled signals given out about the availability of card accounts and other financial services. There was never any real commitment from Government to promote that service. Customers and sub-postmasters were given conflicting signals. Some postmasters were told to tell their clients that card accounts were not available; others were told the opposite. As a result it has not been a success, and a great opportunity has been lost. However, it is not too late. Every UK post office should be able to provide financial services such as bank accounts, bill payment, savings accounts, insurance, business banking, money transfer, bureaux de change and cash machines—and maybe even credit cards, loans and investment services. All those things happen to varying degrees abroad, and there are after all more post offices in our countryside than all the banks and building societies put together. The Government have recognised the importance of the rural post office network, but they need to see it through to the end with that little bit of extra commitment if the money already spent is not to be wasted.