Thursday 19th January Department of Trade And Industry questions:
1. Mr. Desmond Swayne (New Forest, West) (Con): If he will make a statement on the future of the Post Office.
The Secretary of State for Trade and Industry (Alan Johnson): Our ambition is for a publicly owned Royal Mail fully restored to good health and providing customers with an excellent service and its employees with rewarding employment.
Mr. Swayne: How is that ambition affected by the reality that the 4.5 million users of the Post Office card account are going to lose that service in 2010 when funding is withdrawn?
Alan Johnson: The present contract ends in 2010, as it was always intended to do. There needs to be discussions between the Department for Work and Pensions and the Post Office to see how the situation will emerge post-2010.
Not particularly exciting or illuminating you might think my intention, however in this case was not so much to extract a particular piece of information but to flag up an important issue about the future of the Post Office. There are 8,000 rural sub-post offices serving 12 million customers a week. If the card account is to die in 2010, the time that it will have existed will be shorter than the time it took to set up. Readers may recall that it was set up after the decision to no longer pay out benefits and pensions at post offices in cash, thus removing a vital service from some of our most vulnerable and elderly citizens. Instead benefit payments were to be paid directly into bank accounts. This was a disaster for people without bank accounts or without transport and too far from a bank or cash machine to be able to extract the cash from the account. It was also a disaster for the community because of the loss of revenue to the local post office, which often also serves as the local shop, and resulting in the closure of so many. The loss of revenue from the processing of the payments took £400 million from rural post offices and that is before taking into account the loss of 'foot fall' from people who came in to collect their pension and then stopped to make a few other purchases. It is no wonder therefore that 4,000 post offices have closed in the past eight years, which is more than the number that closed in the previous 20 years.
The post office card account was a compromise which was extracted from the Government that allowed those without bank accounts to open a card account and get their pension or benefit payment out of the account in cash at their local post office. The threat to the new card account so soon after it was introduced which I exposed in my question is of critical importance to the future viability of many post offices and the communities that they support.
The Post Office is in danger of being killed off by the death of a thousand cuts. Let me give just two examples. First, the Government is going to set up high street passport offices to accept and vet passport applications. This will take £12 million of revenue out of the Post Office network where that job is currently handled. Second, there are plans to take the renewal of car tax away from post offices causing another significant loss of revenue. Add to these the potential loss of the card account and you may have a catastrophic effect on so many post offices that are the very heart of their communities. Small local post offices are excellent at detecting benefit fraud because most customers are known and potentially suspicious transactions are relatively easily spotted. They are also a pretty useful social service: when a regular customer has not come to collect his or her pension it can often spark informal inquiries to see that they are alright. And, of course, for so many communities the Post Office is also the local shop and they just could no do without it.
If post offices are to survive we have to create new sources of business for them. I think they have enormous potential as a shop front for government and local government services, With some investment in training local postmasters could handle and advise on benefit claims and etc, saving customers time and travel. It is not beyond our wit to do this if there is a will. |
