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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)
I congratulate my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) on securing this important debate about the Post Office’s proposal to franchise its South Woodford branch. He clearly set out his concerns about the plans and about the local consultation process that the Post Office follows. He rightly recognises the crucial community role that post offices play throughout the country.
Between 2010 and 2018, the Government will have provided nearly £2 billion of taxpayers’ money to maintain, modernise and protect a network of at least 11,500 branches across the country. Contrary to the impression that I gained from my right hon. Friend’s remarks, far from closing branches and retreating the Post Office is acting in line with the manifesto commitments given in both 2015 and 2017: to protect the post office network in terms of the loss-making branches in rural and some poorer urban areas.
Today there are more than 11,600 post office branches across the country, and the network is at its most stable for decades. That is because the Post Office is transforming and modernising its network, thanks to investment from the taxpayer and to the hard work and dedication of Post Office staff throughout the country.
Government support has enabled the modernisation and transformation of more than 7,000 branches; more than 4,400 branches are now open on Sundays; and nearly 1 million additional opening hours per month have been added to the network through the modernisation programme. Financial losses reduced from more than £120 million to £24 million by 2015-16, which allowed the Government subsidy to be reduced by more than 60% from its peak in 2012.
That the network is at its most stable in a generation might be one of the reasons why customer satisfaction has remained consistently high. I understand that in my right hon. Friend’s constituency people have benefited from more than 200 additional opening hours per month, and at least one of their branches is now open on a Sunday.
Mr Duncan Smith
I do not mean to take up much time, but I want to make the point that I made to the management: although they say that only by franchising can they have longer opening hours, there was never any reason why that could not happen in the existing post offices and Crown post offices. Longer opening hours is an illustration of something working right, but it could always have been done through the existing post office network—there was nothing to stop that.
Margot James
One of the reasons why it is difficult to extend the opening hours in some Crown post office operations is that those branches are already making losses. Extending the hours has an additional cost—even if doing so was possible given existing staff working arrangements in the Crown post offices. There would without doubt have been additional costs, which might have worsened the losses of most of the Crown post offices, including the one we are discussing. Additional hours are open to question.
The Post Office is offering more to customers by having operations in retail premises that are used to working to a model of longer opening hours, including Sundays. That is more efficient for the taxpayer and ensures that post office services remain on our high streets throughout the country.
I fully appreciate that there can be disappointment and uncertainty in communities where a change to post office services is proposed. Those communities can hold strong views and concerns regarding any planned change, as witnessed by the petition mentioned by my right hon. Friend—[Interruption.]
Mr Nigel Evans (in the Chair)
Order. There is another Division, but this will be the final one.
Margot James
By looking for a franchise partner in South Woodford, the Post Office seeks to ensure continued access to post office services for customers in the area in a way that is sustainable for the long term, keeping post offices on our high streets and in our communities.
My right hon. Friend’s community is not losing its post office service; it will be relocated to the convenience store operated by the proposed new partner, approximately 85 metres from the current location. I understand that the new partner plans to refurbish the premises, and that the Post Office will install a new modern post office in the convenience store. The Post Office recognises the importance of providing good access for all customers, including wide aisles and low-level counters for people with disabilities. It has high standards to ensure that, and that will remain the case in the new branch.
Working with a retail partner really is a sensible response to the challenges facing high street retailers. It has the benefit that overheads, including property and staff costs, can be shared across the combined post office and retail business. The host retailer also benefits from increased footfall and income from Post Office products. The vast majority—more than 97%—of post offices across the UK are operated by independent businesses and retail partners. Moving directly managed Crown post offices to retail partners has proved successful elsewhere and has helped to reduce losses in that part of the network from £45 million of taxpayers’ money per year as recently as four years ago to near break-even today.
Of course, the Post Office needs to continue to take steps to ensure that the network remains sustainable for the future, as it is doing in South Woodford. It does not propose such changes if it does not consider them necessary to secure the long-term sustainability of post office services in communities in my right hon. Friend’s constituency and across the country.
I know that my right hon. Friend has been disappointed by the consultation exercise. The Post Office welcomes and values feedback from customers, which is why it runs local consultation processes. He is absolutely right that such consultations are not designed to elicit views about whether Crown post offices should be franchised, but they generate a lot of data about how they should be franchised and about what services customers are particularly interested in, and the Post Office organises local customers’ forums when proposing relocation, as it did in his constituency.
I know that my right hon. Friend considers that the Post Office should consult on the decision to franchise the current branch before it consults on any potential new location, but it must be for the business to take such commercial decisions, within the parameters set by the Government, to ensure that we protect our valued national network. Post offices operate in a competitive retail environment, and we should allow the business to assess how best to respond to the challenges it faces and to secure post office services for communities for the future.
The Post Office consults, in line with its code of practice, on changes to the network, and that has been agreed with the consumer body. Citizens Advice recently reported that that process has become increasingly effective, and that in most cases improvements are agreed or reassurances provided in response to customer feedback received during the consultation process. That has happened after nine out of 10 of the Post Office’s similar consultations in the past year, demonstrating that the process is effective.
My right hon. Friend rightly mentioned the need for post offices to focus not just on reducing cost but on improving footfall by improving the quality and range of their services. He drew attention to the Cass business school report commissioned by the Communication Workers Union, which I commend for its efforts to assist Post Office to broaden its service offer. The state-backed post bank explored in that paper was actually assessed back in 2010, when the cost of instituting such a bank was put at approximately £2 billion. It was felt at the time that that money would be better invested in badly needed transformation and modernisation of the network, and that was the decision made.
The good news is that banking is now an increasing part of the Post Office’s offer. I am delighted to say that the Post Office announced today that it has secured a deal with Lloyds bank that will enable it to offer a banking service to small and medium-sized enterprises across the country. That service will meet 95% of SMEs’ banking requirements and 99% of retail banking requirements. That really is a step change. The Post Office is also a market leader in identity services; it now has a 40% share of that growing market.
I reassure my right hon. Friend that the Post Office is absolutely not resting on its laurels or just focusing on managing its cost base; it is actively seeking growth in the products and services that it offers. I commend Post Office’s management, and its workers and staff, on the great progress that they are making.
Question put and agreed to.