Post Office Closure (Sutton)

Tuesday 25th February 2014 Westminster Hall

11:00

[Paul Burstow (Sutton and Cheam) (LD)]

It is great to have the opportunity to raise this matter in Westminster Hall this morning, and to debate the issue with the Minister. I look forward to his response to the issues I want to bring on behalf of constituents and business interests in my constituency.

There is a proposal to close two Crown post offices in Sutton and create one replacement Crown post office. The Crown post office in the St Nicholas shopping centre is to close. That is in Sutton high street—I will say more about the geography of my constituency and the town in a minute. Under the proposals, its business will be transferred to another post office, on Grove road, outside the main commercial district of Sutton town centre.

I will start by giving some geographical context. Sutton town centre is on an old coaching route out of London towards Brighton. That might not seem immediately relevant until I mention that the sites of the old coaching inns at the top and bottom of the town—the Angel inn and the Cock inn—are at the bottom and top of a hill. In just under 1 km, the climb from the bottom of my town centre to its top covers 25 metres, so it is quite a haul to get from bottom to the top of that hill. That is one of the challenges of how town centres have been constructed over the years.

The climb is an issue that comes up in my mailbag and it leads to people not always choosing to shop in Sutton. The proposals will result in the Crown post office in the St Nicholas centre, which is at the heart of the town, being closed, and the next nearest being at the top of the hill. That will be an inconvenience. It is vexing many of my constituents, although it is not the only reason why they feel vexed by the proposals.

The coaching inns have gone, and so have the coaches, and today we have a Crown post office at the top of the town and one in the middle of the town. At the moment, the proposals seem to amount to the Post Office placing its own convenience ahead of that of the public. The closure of the post office in the middle of the town will cause the maximum inconvenience to the maximum number of customers of the Post Office’s services.

I have a number of objections to the proposals, as do the London borough of Sutton local authority and many other interested parties. The first, as I have said, is the geography and topography of the area, which is an important consideration, particularly for some of the people who use the services. Sutton has a stable and settled population, and around the town centre there is a large elderly population. Those people are being told that they must now climb to the top of the hill to use the remaining post office in Grove road. I should stress that Grove road is part of Sutton’s one-way system, which allows the high street—the main commercial district of the town—to be a pedestrian-only area. Grove road is a wide, busy, fast road and marks an important break between the retail heart of the town and the outer parts of the area.

I have received expressions of support and of concern about the proposals, not only from residents but from local businesses. Sutton town centre has a business improvement district, called Successful Sutton—a really good initiative taken by the town’s business leaders, who have taken the opportunity to use resources to invest in their own future. As part of Successful Sutton, there was a pre-Christmas offer to shoppers that introduced a complimentary customer buggy, similar to the sort of buggies used at airports, to transport people up and down the hill I just mentioned. The director of Successful Sutton, Ross Feeney, has told me that when the users of the service were surveyed ahead of its proposed winding down after Christmas, many said that one of their principal concerns, and one reason that they would like the service to be retained, was the threatened closure of the post office in the St Nicholas centre.

It was not only customers who were concerned. Successful Sutton has also told me that, as the leader of local businesses in the town centre, it is concerned, and many of its members have expressed concern as well, for a number of reasons. When I met Successful Sutton’s representatives to discuss the closure, they were particularly concerned about the impact it would have on cash businesses in the town, which need to be able to bank their money at the end of the day. The convenience of having a post office in the heart of the retail district was important to those businesses, for safety and security and their ability to carry on with business operations.

Another concern raised was that traders want easy access to parcel services. As the proposals would close a post office in a major shopping mall, a further issue is the loss of footfall and potential loss of trade. Post offices are often important anchors in such facilities. The impact is not just on the general public but on the business community and the town itself.

I referred earlier to the Post Office putting its own convenience ahead of the public’s, and I hope the Minister will be able to help by getting some information from the Post Office and possibly Royal Mail. The Grove road Crown post office is leased from Royal Mail, on what I understand are very favourable terms—part of the reason why the Post Office wishes to consolidate activity at that site. However, the site is a valuable piece of real estate. Although at present there is nothing, to my knowledge, in the development pipeline, its location next to Sutton railway station must make it a candidate for consideration by Royal Mail as to whether best use is being made of the site in the long run. The future of that site is a real question, as is the impact there would be on provision of Crown post office services if the site were to be disposed of and redeveloped in future.

I turn to the St Nicholas centre post office itself. My understanding is that the Post Office walked away from negotiations about renewing that site’s lease despite the flexible approach being adopted by the owners of the St Nicholas centre. I hope that the Minister will pursue with the Post Office the issue of whether those negotiations might be reopened.

Sutton faces an unwelcome consultation about the loss of its post office. I think that there is a case for keeping both Crown post offices; I know that is what my constituents would prefer, but I am sure that I am going to be told the economic costs of doing so and just how expensive Crown post offices are. However, if there is to be a merger, the Post Office must put the needs of its customers first. Maintaining a Crown post office in the heart of the retail centre of the town should be the minimum the Post Office seeks to do.

My requests to the Minister are as follows. Will he assure me that customers will be put first, and in the event of a merger the best location for the post office will be the Post Office’s priority? Secondly, will he press the Post Office to re-engage with the owners of the St Nicholas centre and to discuss options with Sutton council and with me? Thirdly, will he clarify the safeguards and guarantees that are in place already or could be put in place should the Grove road Crown post office become the candidate for the new merged and expanded Crown post office, so that, down the line, my constituents do not face the prospect of a redevelopment leading to another search for an alternative location for a Crown post office?

Those are the issues I want to put to the Minister today. They are causes of concern for my local authority, the local business community, local residents and local traders. I hope that he will be able to give us some indication of how the Post Office can engage constructively with those issues and I look forward to his response.

11:09

[The Minister for Skills and Enterprise (Matthew Hancock)]

It is a pleasure to serve under your chairmanship, Mr Caton, and to respond to this debate. I congratulate my right hon. Friend the Member for Sutton and Cheam (Paul Burstow) on securing the debate and welcome the opportunity to discuss post office provision in Sutton and more broadly. I acknowledge the role he has played and the reasonable tone he has adopted in tackling the tricky issue of the best future for the Post Office and its customers in Sutton.

We all recognise the Post Office’s vital role in our communities throughout the country. Communities are worried whenever changes are proposed to the post office network, not least because, as well as being shops, they are a vital hub of the local community. That is one reason why we made a commitment to provide almost £2 billion in the years to 2018 to protect the post office network, to ensure service provision in communities and to put the network on a long-term footing. As I am sure my right hon. Friend expects, that will be the basis of my response today.

We are acting now to the tune of almost £2 billion and are committed to ensuring that the post office network is sustainable in the long term. That is particularly important following the closure programmes in 2003 and 2008, which saw 5,500 post offices close permanently under the previous Government. This Government’s extra spending on the post office network to secure its future has achieved the most stable network in more than two decades.

The closure programme impacted on many constituencies, including Sutton, and we must take account of later changes within the context of 5,500 post offices having closed over the last decade or so. Some local sub-post offices in Sutton closed in the last decade, and I hope that my right hon. Friend agrees that our long-term spending to secure a sustainable future for the network is the right broad approach. We are ensuring that a minimum network size of 11,500 branches is maintained and investing in those branches to ensure that they are high quality, attractive and more financially sustainable.

[Paul Burstow]

The Minister is right to talk about the loss of sub-post offices in my constituency and many others. A map of Sutton and Cheam shows large gaps in the network, with inconvenience for people who need access to a post office. One has been closed for a long time, but was never formally closed. I hope we will hear good news about that one reopening.

[Matthew Hancock]

I cannot give my right hon. Friend good news on that today, but I am sure that his point will be noted. We all care about post offices because they are critical to hundreds and thousands of small businesses and the many millions of customers who use them daily for the diverse range of services on offer in the branches. I agree that local people of all ages and backgrounds regularly use post offices for mail and access to finance. The Post Office is living through a period of technological change and it is vital in a world of new technology, and to a positive and sustainable future, that it can provide those services while allowing post offices to remain a hub for local communities.

I turn to the proposals for the Sutton Crown post office. The post office network is diverse and of the existing 11,800 branches only around 360—the Crown branches— are directly owned and operated by the Post Office. The rest are operated by independent business people—sub-postmasters—who play a key role. The 360 Crown branches represent only a small proportion of the total number of branches, but they are important to the network as a whole because they tend to be larger and to earn the greatest revenue. However, they also have the highest costs, and they have been responsible for a significant proportion of the Post Office’s losses in recent years. Bringing the Post Office into a sustainable long-term position involves trying to ensure that we get a grip on those losses.

Last year, the 360 Crown post offices lost a total of £37 million throughout the country. Those losses are not sustainable, which is why the Post Office is working hard to tackle them. Probably the best way of doing so is through increasing revenue, which is a mark of a rejuvenated post office network. In a similar vein, costs must be reduced, and that includes the Post Office working with its employees and stakeholders to introduce new technologies.

We are investing about £70 million in 300 branches to make them more attractive to customers and to identify savings in property costs. We are making a short-term investment to ensure that costs are brought under control and revenue is increased to ensure that the Crown post offices come into balance. Those activities will deliver considerable benefits, but expanding revenue alone is not enough, so the Post Office is exploring the possibility of franchising about 70 Crown post offices and merging around six Crown branches. That brings me to Sutton.

We must make the post office network sustainable for the long term. The Post Office is considering merging two branches in Sutton, which are less than half a mile apart. As my right hon. Friend said, the consultation is still open. The situation is unusual because normally there is only one Crown post office for any given area. Due to the Post Office’s franchising and merging activity and the imminent expiry of the lease on the High street Crown post office, it is reviewing the configuration of the Crown post offices in the area.

Merging the high street and Grove road branches will bring the benefit of more investment in the single Crown post office that will remain under the proposal that is out for consultation, so there would be advantages for customers as well as the obvious challenges that my right hon. Friend highlights. The merged branch will have considerable investment, and it will be refurbished and modernised with a brighter environment. It will have new technologies, an additional counter and a private consultation room. It will offer a wider range of services than are currently available at the high street branch, including an external cash machine and identity services, allowing customers to apply for passports and driving licences more easily.

The high street Crown post office costs around £2 to operate for every £1 of revenue that it brings in. The Grove road Crown post office costs £1.50 to operate for every £1 of revenue that it generates. I am sure my right hon. Friend will understand that those costs are not sustainable. If the two branches are merged, the Post office will not only make its business more efficient but will protect services for the long term and make the branch sustainable, which is vital for local communities, customers and small businesses.

I understand that the Post Office considered several options before proposing the merger and it was decided that the current proposal offers the maximum benefits, so it is out for consultation. My right hon. Friend asked about negotiations with the landlords of the high street premises. The Post Office has obviously approached the current landlords but has not been able to negotiate a renewal rent that is better value for money than the current proposal to retain Grove road. Those conversations have taken place, but I cannot say whether there is more to be done. Discussions have taken place, but were not concluded successfully. Under the plan, customers will continue to have access to Grove road’s large Crown post office, which will be improved, but the merger also plans to eliminate the losses incurred in the branches, making them more sustainable and the whole post office system in Sutton more financially viable for the long term.

Having said all that, no decision has been taken. As my right hon. Friend is aware, a consultation is out. I am encouraged by the open dialogue taking place between the Post Office and the council to see whether alternative options can be considered. All the issues, including the topography and customer convenience, will be taken into account in the consultation. I urge any interested parties to submit their views to the Post Office as part of the process and ensure that the community’s concerns and points are considered appropriately.

[Paul Burstow]

I want to ask the Minister about one other thing—he might not be able to help with it today, but perhaps through his officials he could come back to me. I am talking about the status of the Grove road post office and guarantees about its future, given that it is such a prime site for future development.

[Matthew Hancock]

I shall certainly get back to my right hon. Friend with the position on longer-term guarantees about Grove road, should that be the option that goes forward after consultation on the proposal. Discussions with the council will be exploring a range of options, including the council identifying potential alternatives for a post office close to the town centre, taking on board considerations about negotiations on the high street site and the location of the Grove road site. Discussions with the council about an alternative location are part of the ongoing consultation.

I urge the council to continue to work with the Post Office to try and address local concerns, while providing a sustainable, long-term financial future for post office services. I know that Post Office management remain open to discussing all those options with the council and trying to find a solution, in response to the consultation, that is best not only for the Post Office, but for the Post Office’s customers, who are a vital part of the Post Office, too.

To sum up, I fully appreciate the concerns of not only my right hon. Friend but his constituents about the proposed changes. I hope that I have been able to set out some of the thinking behind why the consultation has been proposed in this way and also given some assurances that the consultation is ongoing and that all options are being considered. The reasonable approach being taken by my right hon. Friend, the council and Post Office management is right. Everybody understands that the losses in the Crown network were unsustainable. Given that finance is available to put together an option that can be sustainable over the long term, it is important that the process is gone through, but I am glad that it is open and consultative. The consultation closes in early April, so anybody wanting to submit a view has just over a month to put their points to the Post Office. I will ensure, and can provide reassurance, that the Post Office is listening to all points and options that are put on the table.

In closing, I hope that my right hon. Friend recognises not only the understanding of the vital role that post offices play in communities, but that this genuine consultation is about trying to find the best, financially secure, long-term solution to having a post office in the middle of Sutton—whether through the proposal on the table now or through other options being considered with the council. Although some changes are likely, I hope that, in the longer term, they will bring benefits to his constituents and reassure them that they will have a sustainable post office network to serve them in the way we all know and understand is so vital to our local communities.

11:25

Sitting suspended.