Post Office Network

Thursday 25th April 2019 Westminster Hall

13:30

[Dame Cheryl Gillan (in the Chair)]

Before we start the debate, I remind colleagues that the Post Office group litigation concerning in particular sub-postmasters and their contractual relationships with the Post Office is currently before the courts. In accordance with the House’s sub judice resolution, reference should not be made in the debate to cases that are currently before the courts. I will allow discussion of the wider issues relating to the sustainability of the post office network—that is permissible—but I remind Members that I will intervene if I think they are overstepping the mark.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

I beg to move,

That this House has considered the sustainability of the Post Office network.

It is a real pleasure to serve under your chairmanship yet again, Dame Cheryl. I thank the Backbench Business Committee for granting this important debate on the sustainability of the post office network and the many Members from all parts of the House who supported my application for it. I also thank my Hansard Society scholar intern, Rebecca Orbach, who worked so effectively in organising my application.

At the outset, I want to recognise and thank the sub-postmasters in my constituency, and across Scotland and the rest of the United Kingdom, who work hard in difficult circumstances to serve our communities. I also want to acknowledge a hard-working sub-postmaster—they know who they are—for working across all parties to seek support for the future of post offices. Friends in the National Federation of SubPostmasters and the Communication Workers Union also deserve our recognition for their fight for the preservation of the post office network. Finally, I thank all those who have attended today’s debate. I am sure that Members will agree that the post office is a recognised and important part of our respective communities and an institution that is widely recognised and respected across Scotland and the rest of the United Kingdom.

The post office is a valued public asset, as many of our constituents have made us aware. From the reaction of people in my constituency to the Crown branch closure in the centre of Motherwell and the temporary closure of the branch in the centre of Wishaw, I know that people and businesses not only use, but rely on their post offices and the services they provide. Their importance has underpinned the strong opposition in communities to the franchising of Crown branches and the closure of franchised branches due to poor postmaster pay.

[Chris Elmore (Ogmore) (Lab)]

I congratulate the hon. Lady most sincerely on securing this important debate. Part of the problem in my constituency is that over the past year we have had temporary closures in Ogmore Vale, Aberkenfig and the community of Bettws. Those temporary closures are ongoing, with one of them nearing a year. Post offices provide banking services as well as the postal service, and they are often linked to local shops. Those services are important, given all the bank closures in my constituency. I have only one bank left for 58,000 constituents. Temporary closures are as much of a problem in my constituency as permanent closures. Does the hon. Lady agree that the Post Office needs to up its game in resolving those temporary closures?

[Marion Fellows]

I agree with the hon. Gentleman, and I will come to the point he raises further into my speech.

[Andy Slaughter (Hammersmith) (Lab)]

I am more cynical than my hon. Friend the Member for Ogmore (Chris Elmore); I have had a temporary closure that has lasted four years and I have four temporary closures. The Post Office knows that permanent closures get a lot of opposition, so temporary closures and downgrading Crown post offices to the back of WHSmith is its way of undermining the network while muting public opposition. I congratulate the hon. Lady on securing the debate. She is obviously not fooled in that way.

[Marion Fellows]

I totally agree with the hon. Gentleman. I have a temporary postmaster still in office in Wishaw after the sub-post office there was temporarily closed last year.

What the public are seeing is yet another managed decline of a valued public asset driven by a Tory ideology of non-intervention. The public are, through their elected Government, the owners of Post Office Ltd. They feel and have let their elected Members know that the Government should be driving action to ensure the sustainability and promotion of the post office network. I hope the Minister will outline not only the actions her Department has taken, but the further actions she will take in response to the concerns of communities, postmasters and Members here today.

The main issue undermining the sustainability of the post office network is the postmaster crisis. At the root of that is sub-postmaster pay. Scottish National party MPs and Members from all parties have heard over and again from their local sub- postmasters about how poor pay is a leading cause of closures in their constituencies; I have even had sub-postmasters contact me from England to complain about the level of pay they are receiving.

The National Federation of SubPostmasters—the organisation that represents sub-postmasters across the UK—has said that two thirds of branch closures are due to sub-postmaster resignations, and they have attributed that to low pay. Sub-postmasters’ general conditions are also poor, with as many as one third taking no time off at all last year.

A survey released this month by the National Federation of SubPostmasters found that one in five towns could lose its post office in the next year. Of the 1,000 workers surveyed, 22% plan to hand in their keys, pass on their branch or downsize. The Post Office’s 2017-18 annual report states that sub-postmasters’ pay has fallen by £17 million in one year. That is a 4.4% cut. Sub-postmasters sustained a brutal £27 million cut the year before. Looking at postmasters’ pay in the long term, we see that it has declined by £107 million since 2012.

As part of Post Office Ltd’s North Star initiative to create a profit of £100 million by 2021, it used cuts to sub-postmasters’ pay to increase its profits from £13 million to £35 million in 2017-18. That is while the majority of sub-postmasters earn less than the minimum wage for running a vital public service in their communities.

[Carol Monaghan (Glasgow North West) (SNP)]

I congratulate my hon. Friend on securing this debate. The issue has been raised by sub-postmasters across the UK, and I have had meetings with some in my constituency. My hon. Friend has talked about the job that sub-postmasters do. The sub-postmaster in Scotstoun, Ali Akram, has an old folks’ sheltered housing complex across the road. He considers the work he does there to be a vital community service. He goes way above and beyond his actual job—he helps the men and ladies package things up and properly address them and so on—but when we consider the pay of sub-postmasters, that is not valued at all.

[Marion Fellows]

My hon. Friend is completely right, and I have heard many similar tales from Members from all parts of the Chamber. One told me that the sub-postmaster who served his mother actually helped her with her banking, going way over and above what he was paid to do. At meetings with sub-postmasters, I have been told how they feel driven to help their communities, but because of the limited pay they are getting, they feel they will no longer be able to offer that valuable public service.

The majority of sub-postmasters earn less than the minimum wage for running a vital public service. Our postmasters are being overworked and underpaid while Post Office Ltd is allowed to hoover up their wages for its own profit, rather than properly remunerating the people responsible for that profit. What is the Minister’s assessment of the Post Office’s North Star initiative in general and in relation to the decrease in sub-postmaster pay? Postmasters are working hard for poor pay so the executive board can meet its arbitrary profit targets. There is no real pay-off to that, as it is fuelling the downfall of the post office network.

There is also no real strategy to deal with the crisis that the Post Office faces. Across the UK, 460 postmasters want to leave as part of the network transformation programme, but cannot do so until a new postmaster is found. Currently, there is interest, and interest only, in 90 of those branches, so 460 people are essentially being held captive because the remuneration rates are so poor that Post Office Ltd cannot find a new postmaster to fill the position.

I am aware that a deal has recently been struck that will increase remuneration on banking transactions, but that is only one small source of income for sub-postmasters, and it will not come into effect for another six months. What discussions has the Minister had with Post Office Ltd on remuneration for postmasters, and why is there a six-month wait before the new rates come into force? Our postmasters need better pay now, and the whole postmaster contract, introduced in 2012 under a Tory Government, needs to be reviewed. Will the Minister commit to urgent action to review the whole contract?

In February, the Minister wrote to me to say that she would ask Post Office Ltd for the hourly rates effectively paid to sub-postmasters. Her Department must conduct an independent analysis of that. Given the poor treatment of postmasters by Post Office Ltd over decades, it is essential that the injustices that they have faced and the oppositional stance from Post Office Ltd management are not allowed to continue and influence any findings or outcomes. The attitude of Post Office Ltd towards postmasters has been shameful, and caused the loss of dozens of jobs and ongoing legal action that is now sub judice. I hope that the Minister will commit to an independent analysis of remuneration to sub-postmasters, and to a thorough review of postmasters’ contracts.

Furthermore, our postmasters have already been paying the price for the executive targets of Post Office Ltd through poor pay. Any future unexpected legal costs payable by Post Office Ltd must not influence decisions on postmaster pay. Postmasters cannot be expected to continue to pay the price for the Post Office’s shortcomings. The Government must, for once, put the interests of working people ahead of the aims and aspirations of an executive board and profit. I hope that the Minister will commit to ensuring that the outcome of any court case will not affect any potential new deal for sub-postmasters.

The consequence of poor postmaster pay is that communities are left without a branch and the services that they need. In response to a written question last month, Post Office Ltd confirmed that 1,016 branches across the UK are temporarily closed right now. Of all 12 regions of the UK, Scotland is the hardest hit by the postmaster crisis, with the highest number of temporarily closed branches—currently 134, representing 13% of all temporarily closed branches. That is 134 communities without something as simple as a post office, and 52 of the 315 branches with a temporary operator are also located in Scotland.

Temporary closures are affecting access. In 2017, Citizens Advice reviewed the Government’s access criteria and raised two concerns, the first being that measuring proximity to a post office as the crow flies does not accurately reflect the distance that people have to travel. It estimated that, if more accurate measurements were used, the UK Government would have failed five out of six of their own access tests. This is an attempt to pull the wool over people’s eyes. The number of branches operating in the post office network has been tumbling, which is greatly affecting people’s ability to access post office services, both rurally and in urban areas.

The Post Office’s own figures show, between 2014-15 and 2017-18, performances getting worse in five of the six elements used to judge performance. There is no doubt that the postmaster crisis is a driving force behind access to branches and quality service, so what are the UK Government doing to improve access, while maintaining quality services?

Crown branch closures have also affected access. People can no longer access the full service that they had previously at their post office. Since 2013, the Crown network has been cut by a massive 60%. Although Crown branches make up only a small percentage of the branches in the post office network, they have historically represented 10% to 20% of the Post Office’s overall revenue. They therefore play a crucial role in the network’s past, present and future, and must be preserved. These branches are flagship stores in prominent locations, so the impact on local communities, and the network generally, of closing them can be massive. Smaller, franchised branches often do not have the same presence in communities, provide the same level of service or offer workers the same conditions. In 2012, a report from Consumer Focus found a drop in performance; it concluded that franchising resulted in longer queuing, poorer customer service and advice, poorer disabled access, and a reduced number of counter positions.

When Crown branches are removed from prominent places in town centres, that removes yet another reason for people to visit their high street. That in turn reduces footfall and the likelihood of people spending on our high streets, as opposed to shopping online. The businesses surrounding Crown branches often benefit from being near a post office, which affects their income. Speak to any person from any town and they will complain about the state of their high street and closed units. What assessment have the Government made of the impact of Crown branch closures on town centres?

It is not just communities and sub-postmasters who are getting a rough deal from the current strategy—so are workers who are TUPE-ed over from a Crown branch to a franchise. The majority of workers being TUPE-ed opt to leave the profession, and take with them their skills and experience. In 2014-15, only 10 out of 400 staff were TUPE-ed over to a new retailer. In 2016, only six in 200 were TUPE-ed.

The Communication Workers Union has expressed concerns about conditions and the loss of skills. New jobs with franchising partners such as WHSmith are advertised at lower rates than the very same jobs with Post Office Ltd. That affects not only workers and their families, but the economy of the local community. According to the CWU, it makes more financial sense for franchise partners to offer a settlement to get Crown workers out the door, and bring in new staff in fewer positions, on lower pay and with poorer conditions.

The UK Government cannot be allowed to shake off their responsibility. Just because jobs are franchised, that does not mean that Ministers can turn a blind eye to the lower pay and conditions. Ministers have a duty to staff working directly and indirectly for Post Office Ltd. Will the Minister take action to prevent a two-tier system, and to bring everyone up, not down, to the same standard, regardless of the type of branch in which they work?

WHSmith has informed the CWU that once staff are TUPE-ed to their franchises, the CWU will no longer be recognised, so new and existing staff are not only being given a poorer deal, but are not even being given the means of improving their situation. They are being told to like it or lump it. Every workforce must have the right to union recognition. A stipulation for any new franchise contract must be that unions—the CWU and others—be recognised. Will the Minister commit to ensuring that?

The CWU has also expressed concerns about the fact that WHSmith was voted worst retailer on the high street in a 2018 poll by Which?. It has appeared in the bottom two in the Which? survey in each of the last eight years. With that rating, customers cannot expect quality service, and workers cannot expect a quality employer. Given that these retailers are carrying out roles on behalf of the UK Government as the special shareholder of Post Office Ltd, what is the Minister’s assessment of the quality of the service and rates provided by retailers such as WHSmith?

The recent decision to turn another 74 Crown post offices into franchises in WHSmith stores is alarming, particularly given reports that franchising is occurring without consultation with existing local post offices, meaning that the competition risks further destabilising the network. There have even been cases where a new franchise was opened in a WHSmith that was less than five minutes away from a post office branch, without there having been any consultation with the existing postmaster. Such decisions can have a devastating effect on a postmaster’s income, and can lead to a branch closing. What steps will the Minister take to ensure that sub-postmasters are listened to, and that their branch’s sustainability is taken into account in the decision-making process?

Communities must also be consulted, and any consultation must be meaningful. When the Post Office “consulted” people in Motherwell about the franchising of the town centre branch, it was merely a rubber-stamping exercise; I conducted my own consultation, which found that the post office was well used and well valued by the local community, but the Post Office pushed on with its plans anyway. A proper consultation would have required Post Office Ltd to listen and react to what it was told, but it has not done so. Nor have the Government: they have constantly palmed off the public and hon. Members with claims that anything that relates to the Post Office is a matter for the Post Office. Can the Minister outline what major steps the Post Office has taken in response to communities’ reactions to Crown branch closures?

Last year, the Post Office’s director of sales and trade marketing told the all-party parliamentary group on post offices that it had no contingency plans in case WHSmith—a company with 14 years of declining sales—goes bust, which would leave communities with no post office and leave Post Office Ltd floundering, deepening the postmaster crisis. With 596 branches, Martin McColl is the largest retail operator, while One Stop has 179, so Post Office Ltd may be guilty of putting all its eggs in one basket. Can the Minister outline her Department’s contingency plans in case the larger retailers fail and their post office branches close along with them?

The post office network is being gutted by Post Office Ltd, and the UK Government are allowing it to happen. If the UK Government see a real future for post offices as a “front office for Government”, the physical network must be supported to maintain services and attract more people to opt in. More Crown branches are closing and more mobile post offices are being deployed, which is not attractive and does not represent the strong public institution that people once knew.

The machinery and skills needed to perform certain services are being lost as Crown branches close. Not only are private providers of services not opting in, but neither are the UK Government. The Home Office has chosen not to renew its contract for biometric services with Post Office Ltd, which means that fewer people are visiting their post office and less money is being spent. I accept that a competitive tendering process has to be undertaken, but why has Post Office Ltd not been competitive enough?

Will the Minister pledge to speak to her colleagues in the Home Office and other Departments about what services they can provide through the post office network? In their response to the 2017 consultation on the post office network, the UK Government pledged to look at what new products post offices could provide. New products serve not only communities but sub-postmasters, who can increase their income. New services could therefore be a way of preventing the mass exodus of postmasters. Since publishing their response, what products have the UK Government introduced? What products are being examined?

The preservation of existing services is important not only for the sustainability of the post office network and sub-postmasters’ incomes, but for particularly vulnerable people. For example, people who use Post Office card accounts to withdraw social security payments rely massively on that service. Typically, people are taken to a bank in their youth by their parents to open an account, but that is simply not the case for everyone, especially those who are most vulnerable. I have assisted constituents who needed to open a bank account but were unable to—not because they did not want to, but because they held no recognised ID, as they would then be pursued for debts and put in an even more difficult position. How do the UK Government plan to support those people when the card account contract expires in 2021? A commitment must be made to extend the contract, not just until 2024 but indefinitely. People must have the choice. Not extending the contract would be a choice by this Government to place yet more barriers in front of people to prevent them from accessing the support that they need.

One key way in which the network can achieve longevity is through banking transactions. The proposal from the CWU, in conjunction with Cass Business School, to form a post bank deserves serious consideration. With more and more banks closing in our communities, a post bank could be a viable public alternative that provided customer service on people’s doorsteps and in their communities while larger banks are abandoning them. It would require vision as well as will from the Government, but right now they have no vision—only a strategy for managed decline.

If the UK Government truly see a future for the post office network in which it can continue to have a prominent presence in town centres, so that people can still access an array of services, there needs to be a clear strategy. That strategy cannot simply be cuts dressed up as efficiency, or privatisation disguised as modernisation. The UK Government need to step up to the plate and ensure that this public service meets the standard that the public expect. Their key pledges must be to review sub-postmaster contracts, drastically increase and improve services, halt and reverse Crown branch franchising, commit to union recognition and better conditions for workers, actually listen to communities and sub-postmasters, develop a contingency plan in case retailers go bust, and assess the impact of the current strategy on town centres and vulnerable groups.

Fulfilling those pledges would be a major step towards a sustainable and doable strategy. However, I and many others have a suspicion that the Tories are overseeing the managed decline of the post office network as part of a deliberate strategy to underfund the service, making it poorer in order to lower confidence in it and justify a full-scale privatisation of the network. If that happened, I am sure it would be met with the same public opposition as the Crown closure plans.

The SNP believes that post offices should remain in our communities, that the franchising of Crown branches should be halted and that Crown branches should be re-established, so that people can enjoy more and better services, workers and sub-postmasters can enjoy better conditions, the post office network’s sustainability can be ensured and the commonweal can be served. A public service should serve the public, not the aims and aspirations of people on retailers’ executive boards or of Post Office Ltd, which is profiting from the feebleness of the UK Government, who refuse to act.

The post office network is in a postmaster crisis. The strategy of non-intervention is not coherent. Communities, sub-postmasters, workers and the network as a whole need action—and they need it now.

[Several hon. Members rose—]

[Dame Cheryl Gillan (in the Chair)]

Order. There are nine speakers on my list, including the Front Benchers. I am not minded to impose any time limit at this stage, but I wanted everybody to know the situation.

13:58

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

It is an absolute pleasure to serve under your chairmanship, Dame Cheryl. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on securing what is undoubtedly a very important debate.

I know from my constituents how important the post office network is to rural communities such as those that I represent in the Scottish borders. When the post office in Eyemouth closed temporarily last year, I received a huge number of complaints, letters and emails from residents worried about how they would access their benefits, pensions and other postal services. In fact, the reaction was as strong as the opposition to losing a local bank branch or another public service such as a local library. That desire to protect the local post office network needs to be put to good use. Local people certainly have a role to play in supporting their post offices, but I wonder how many people understand how postmasters earn a living. Perhaps we all need to do a better job of communicating that we all must use our post offices and spend money there as often as we can to ensure their survival.

I absolutely agree that the post office network provides an invaluable service, which needs to be protected. I find it hugely concerning that the National Federation of SubPostmasters has found that one in five sub-postmasters is considering closing or downsizing in the near future. What should our reaction and response be to that, and how should the Government react?

Tim McCormack, who lives in Coldstream in my constituency, ran the post office in Duns for a number of years. He has been a very vocal critic of the network transformation project, and is calling for radical reform. There is clearly a need to look again at whether the current model has put post offices on a sustainable footing for the future. I urge the Minister and the Government to look closely at the issue. Do we need to increase the network subsidy? Can the Government do more to support postmasters who provide over-the-counter services on their behalf? For example, the Post Office’s contract with the Department for Work and Pensions to provide the Post Office card account runs out in 2021. Will the Minister raise with Government colleagues the income and footfall that such services provide for postmasters, and press for the contract to be renewed for a further period?

I note your comments, Dame Cheryl, at the start of the debate about ongoing legal action, which is an important issue. I will not go into that case, but it is important that the Government consider the possible outcomes of that litigation, and how that might impact on the sustainability of the post office network. As the hon. Member for Motherwell and Wishaw indicated, as banks have closed, a number of banking services have been transferred to the post office network. There would clearly be a big impact for many communities who are now completely dependent on the post office network if that network was not on the same footing as it is today.

Some have argued that the post office network in Scotland should be devolved to the Scottish Government and the Scottish Parliament. That is not something I support. That would cause all sorts of added costs, and would not in itself solve the problem. Of course, it is already open to the Scottish Government to provide financial assistance to post offices for providing non-postal services, so some extra support could be provided by Holyrood if—[Interruption.] Dame Cheryl, is this not telling? We are talking about a very serious issue here, which affects all our constituents, and all a group of SNP Members can do is to barrack and shout at someone who is trying to provide a constructive solution.

[Dame Cheryl Gillan (in the Chair)]

Order. I am not going to allow any barracking. This will be a civilised debate under my chairmanship.

[John Lamont]

Thank you, Dame Cheryl. I am very grateful for your intervention. I think it is appropriate that we conduct ourselves in a civilised manner, and I am happy to do that.

Notwithstanding my concerns about the post office network, it is important to put the issue in context. Despite a significant reduction in the network subsidy since 2011, across Scotland we have lost just over 2% of post offices, which is roughly the same loss as has been experienced in England. In my constituency, we have lost two of 46 post offices. It is not the case that the network is falling apart.

The Post Office has gone from making a £120 million loss in 2012 to becoming profitable again, which is undoubtedly a good thing. I also very much welcome the recent announcement from the Post Office that it is increasing the amount of money it pays postmasters for carrying out banking transactions. That is clearly long overdue; the issue has long been a matter of complaint among postmasters in my constituency in the Scottish borders. I end by reiterating the importance of the post office network to rural communities.

[Jim Shannon (Strangford) (DUP)]

On rural communities, which is where the hon. Gentleman and I are coming from on this, should there not be an absolute commitment from this place, and from the Government, to safeguarding and securing what can be seen as the last bastion of social interaction for elderly and vulnerable people in isolated rural communities? The importance of that cannot be underlined enough.

[John Lamont]

The hon. Gentleman makes a critical point. For many communities and small towns across Scotland and the entire United Kingdom, the ability to access cash, financial services and benefits is critical. As banks and cash machines close, there are very often no other alternatives. It is critical that we in this place do something to ensure that people in those communities, including the most vulnerable older people, can continue to access such services, and to ensure that we can sustain our high streets, and shops and businesses in these communities, which are dependent on cash. The post office network is an important part of that. People are clearly using postal services differently, and that trend will inevitably continue, which reinforces the need for the UK Government to continue to monitor and review the sustainability of the network.

I conclude by again congratulating the hon. Member for Motherwell and Wishaw on bringing this important debate.

14:06

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I am delighted to speak in this debate and I thank my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) for securing it. We all understand the value and importance of having post offices in our communities. More than 2 million small businesses—62%—use them at least once a month. In rural areas, they are vital; 36% of rural businesses use post offices weekly. One in four of all businesses are registered in rural areas and contribute well over £200 billion to our economy. Citizens Advice has been clear that eight in 10 small businesses in remote rural areas will lose money if local post offices close.

We all remember around 2008 when post offices were gradually being run down under the Labour Government of the day and when the services our local post offices could provide were wrested away from them, paving the way for mass closures. Long before I was elected in 2015, in 2008, I remember going round the doors in my constituency asking people to sign a petition to save their local post offices. I and other party activists did that in Skelmorlie, Glengarnock and Kilwinning. Naively, we thought we could make a difference. It turned out the Post Office’s so-called consultations were not much more than a sham. To make it worse, our then local Labour MP voted on five separate occasions under the Blair Government to close post offices across the UK and then immediately afterwards put out press releases to the local papers lamenting the closure of our local post offices. Sometimes it is not hard to see why people become cynical about politics.

Some post offices are now being closed by stealth. By that, I mean that postmasters are either retiring or shutting up shop because it has become so difficult to make a living out of the business, important though that business is for our communities. Postmasters in my constituency tell me that they were earning minimum wage. We know from recent announcements that as of October 2019—although I do not know why it is taking so long—our sub-postmasters will receive better remuneration from the Post Office for the key services that they provide for the public. The question is whether that improved payment is enough for the long-term sustainability of the service, and we will have to reserve judgment on that.

Postmasters tell us that they hand count thousands of pounds daily. That money is accepted, checked, double-checked, bagged, remmed out and sent away, for much less money than the banks charge their customers. The gap is large, which means that either banks or the post office are making a lot of money on the back of postmasters. That does not seem fair to me.

Our postmasters are taking on a greater role in our communities as banks abandon our towns. Post offices are an important amenity in our communities and offer a lifeline on everything from pensions to benefits and, increasingly, day-to-day banking services. In so many towns, our post offices are the last place where face-to-face services are still available.

We all understand how important it is that banks properly remunerate postmasters for the services they provide to major banks, which turn over huge profits, and I am pleased that there will be a near-threefold increase on current rates. However, some postmasters in my constituency say this simply does not go far enough, which causes me a lot of concern. Indeed, we are all keen to see if the details of this offer are sufficient to protect our postmasters and, importantly, the network’s sustainability as a whole. I have been lobbying the Government and the Post Office chief executive about this for two years, so I am delighted that we have at last made some progress, but the devil will be in the detail.

I have spoken out about the threat to our post office network in four different debates since I was first elected in 2015—we seem to have them once a year. It is an issue that I campaigned on with Scottish National party activists in my community long before I was elected, and I will continue to do so until our postmasters get the fair deal that they deserve. Our post offices are too important to be left to flounder at the mercy of banks that are apparently too big to fail, and of successive UK Governments who have consistently failed to recognise the importance of post offices to our communities.

[Jim Shannon]

I want to put on record what a very good campaign the Scottish National party and others have run on behalf of the banks that are closing, and the importance of post offices in filling that gap. Over time, their campaign has outlined and highlighted the issue of banks closing at a fast rate, which means that the importance of post offices is increasing. It is so important.

[Patricia Gibson]

I thank the hon. Gentleman for that observation and very much welcome it.

[Carol Monaghan]

My hon. Friend talks about the importance of post offices to our communities. In fact, we talk about them as a public service. Does she share my concerns about hearing talk of profit or loss? Public services cost money and must be invested in. We should not consider profit when we are talking about a vital community lifeline.

[Patricia Gibson]

When we talk about profits in relation to public services, there is always the danger that we understand the value of a pound, but not the value of something that cannot be measured in pounds, shillings and pence.

The failure to recognise the value of post offices to our communities can be seen in the fact that 74 Crown post offices have been franchised in WHSmith stores. There are reports that franchising is being done without proper consultation with existing post offices, which means that the competition risks further destabilising the network. There must be strategic consideration of franchising. In addition, it is deeply concerning that the Post Office appears to have admitted that there is no contingency plan in the event of the collapse of WHSmith, which has continued to decline over the past 14 years. There is no contingency plan should WHSmith collapse. What does that say about the strategic planning to protect our post offices? I suggest it says rather a lot.

The UK Government seem to have a pattern of abdicating responsibility for this matter, insisting that it is a matter for the Post Office. That paved the way for the Government to insist latterly that they could do nothing about the banks, which we owned as taxpayers, fleeing our towns. There is a pattern emerging here. At the heart of this debate must be the recognition that the post office network has a vital role in the day-to-day lives of many of our constituents—older people generally, and often the most vulnerable in society. The SNP believes that the Post Office must be more than a commercial entity and must serve a distinct social purpose. The Government must commit to a programme that ensures there are no post office closures, and urgently renew their funding of the network to safeguard its future.

Post Office branches are hugely important to older people. The services offered are a lifeline. People pay bills, access their benefits and get advice. Older people and those on low incomes make greater use of cash and banking services and bill payment services, and vulnerable groups and remote rural residents use post offices for informal community services, such as support and information—they are touchstones of our communities.

It is not good enough for the Post Office to have been managed into decline in the way it has been. For too long our post offices have been undermined and undervalued, and our postmasters underpaid. As a result, some of our most valued post offices are being closed by stripping away their sustainability and then earmarking them for closure. Now, in a new era, we need them more than ever. The neglect and indifference have to stop. It is time to pay our postmasters properly and to stand up for them. It is time to stop the rot and see our postmasters for what they are: community champions who are often not missed until they are gone, struggling on to survive in a hostile business environment where making a living of any kind is increasingly challenging. That needs to be recognised and saluted.

The Minister said in a recent Adjournment debate that her Government support postmasters, and that this is evidenced by a pledge in their election manifesto. I hope she is listening and will discuss with her colleagues in Government what more she can do to show their support than just having a line in a manifesto. We need a positive and concrete set of actions.

14:15

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on securing this debate. Before I became an MP, we stood together to fight for the Brandon Street post office in Motherwell. It was a very good Crown post office and well supported by the local community—even more so by the local shops, which got involved in collecting petitions. They did a very good job, but it was not good enough for the Post Office.

I want to make hon. Members aware of my entry in the Register of Members’ Financial Interests. I am currently on a five-year career break from Royal Mail, where I worked for 28 years before being elected to the House. I am a proud member of the Communication Workers Union, and I wish it all the best for its conference in Bournemouth next week. I welcome delegates in the Public Gallery, who are here to hear this debate.

Throughout my career as a postal worker, I have seen at first hand the clear benefits of having Royal Mail and the Post Office as a unified public service serving all communities across the UK. That is why I fought against the privatisation of Royal Mail for over 20 years. I resisted attempts by successive Governments to fragment and privatise postal services. However, the Tory-Lib Dem coalition was eventually successful in privatising Royal Mail in 2013. They sold off a vital public asset that serves the public good, and undervalued it in the process—it was the biggest post office robbery. There are competing estimates of the real cost of privatising Royal Mail; one suggests that it cost taxpayers around £1 billion.

I have said it before, and I will say it again: Royal Mail was not for sale. I am proud that the next Labour Government have committed to bringing Royal Mail back into public ownership. It is time that Royal Mail once again runs in the interests of the people, and is not used to maximise private profits. Despite the privatisation of Royal Mail, Post Office Ltd was kept in public ownership, but recent years have been marked by constant attacks on the post office network. The result has been a steady fall in the number of Crown post offices since 2013, and they now make up just 2% of the overall network. Some of those closures were justified by arguments about protecting other post offices from closure in the future. We accepted that, but we now face a new threat to our Crown post offices: franchising.

The Government are planning to sell 74 Crown post offices to WHSmith through the franchising process. Is WHSmith a suitable company to take on the responsibility for providing postal services? As we have already heard, it is a company that consumers voted the worst retailer on the British high street. Far from sustaining the post office network, franchising will further its decline. Does the Minister still consider WHSmith an appropriate franchise partner for the Post Office in the light of its seeking to derecognise the CWU, which supports the interests of all staff, including the postmasters? I hope she can provide an answer.

Staff will have to endure low pay and cuts to their terms and conditions, and consumers can look forward to lower service standards. However, I am encouraged by the public, who are fighting back against the threat posed by franchising. Some 92,000 people have signed a petition in support of the CWU’s Save Our Post Office campaign—Labour is on their side, and I thank them for signing the petition. We will end post office closures and stop this unnecessary franchising process in its tracks.

The Government have said that modernising the post office network is vital to ensure its sustainability, yet the modernisation programme has been a smokescreen for post office closures and staff redundancies, and is failing on its own terms. Post Office revenues are falling—revenue from Government, mail, retail and financial services all declined in 2017-18. The truth is that the post office network is struggling because of a loss of post offices and staff through the alleged modernisation. We have lost many skilled workers.

We cannot allow the post office network to decline further because communities across the UK rely on it. The Government’s own survey of the post office network in 2016 found that 95% of people use a local post office at least once per year. Almost 60% were unaware of any alternatives to post offices when it came to assessing standard postal services. If the Government continue to push the post office network into decline, the most vulnerable people and communities in our country will pay the price.

It is important to reflect on the fact that the post office network has changed in many respects. One of the most notable changes is the growing role of sub-postmasters, who now run 98% of the post office network, yet the Government expect them to run their post offices with ever-decreasing levels of funding. The Post Office’s 2017-18 annual report highlighted that there has been a 4.5% reduction in funding for sub-postmasters. I have been contacted by many sub-postmasters in my constituency who have felt the reduction in funding—one in particular. The sub-postmasters in Coatbridge, Chryston and Bellshill are angry.

I was recently contacted by a sub-postmaster who wanted to share his experience. His staffing costs are significantly higher than the remuneration that he receives from the Post Office Ltd. As we lose bank branches, residents increasingly rely on his post office to carry out their banking transactions. That is proving costly and time-consuming, yet no financial support from the Post Office Ltd is available to him to provide those banking services. On his behalf, I ask the Government to review commission rates and remuneration for sub-postmasters. I hope the Minister is listening and will take that forward.

If sub-postmasters are not properly supported, I fear we will see the loss of more post offices in our communities. That is not just a threat; it is what we are being told. Public demand on the post office network is changing, particularly as a result of the loss of banking services in communities across the UK. Banks are closing, and post offices have to pick up the pieces. I welcome Labour’s commitment to establish post office banks, including 300 in Scotland.

I pay tribute to the work of the CWU, of which I am a proud member. I have stood alongside CWU reps and members in many disputes, fighting proposed post office closures and cuts to staff terms and conditions. I will continue to stand alongside them inside and outside this House. The fight to rebuild a publicly owned and unified postal network continues. It must be won for all communities across the UK.

14:23

[Brendan O'Hara (Argyll and Bute) (SNP)]

It is a pleasure to serve under your chairmanship, Dame Cheryl, for this important debate on the sustainability of the post office network. I congratulate my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) on securing it and on her excellent contribution, which highlighted the ongoing crisis in the Post Office and the pressure faced by those who have to work in extremely difficult circumstances to deliver a service on which so many of our constituents rely.

There have been some excellent contributions, none more so than that of my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson). The Government should be in no doubt about the strength of feeling about this issue and the support that the post office has from Members of all parties. I share the concerns of my hon. Friend the Member for Motherwell and Wishaw, who said that the post office network is being run down and set up for future privatisation, which would have absolutely catastrophic consequences, particularly for those of us who represent and live in rural communities.

I hope the Government take heed of what is being said here today and start to show the level of commitment required to sustain—and, indeed, grow—the post office network. As we have heard, it is a lifeline service for many people living in rural areas, such as my constituency of Argyll and Bute—a vast area covering more than 7,000 sq km and taking in 26 inhabited island communities.

I have my doubts about whether that will be the case. Last month, when responding to an Adjournment debate secured by my hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands), the Minister said that, under this Government, the post office network is

“at its most stable in decades”,

and that

“Government funding required to sustain the network has drastically decreased and is set to decrease even further in future years.”—[Official Report, 27 March 2019; Vol. 657, c. 477.]

That is not the message that my constituents want to hear from the Government. The Government have achieved what they describe as stability, but we in Argyll and Bute have lost 20% of our post offices in the past 13 years. In the past two years, six post offices have closed their doors, yet the Government still say they plan to decrease funding drastically in the coming years. We can have no faith in them.

Our rural communities know how important local post offices are in sustaining already economically fragile parts of the country. I am afraid that, as with so many other areas of their lives, when it comes to protecting the rural post office network, they can have no faith that the UK Government will act in their best interests.

It is not just the ongoing threat of closure that threatens many of our rural post offices, but the additional workload being placed on them as high street banks abandon rural Scotland as fast as their desire to make a quick buck will carry them. In the time remaining to me, I want to look at the effect that bank closures are having on the rural post office network. Small rural post offices, which are often community-run, were not designed, and are simply ill-equipped, to replace long-established banks. I want to use as an example the community post office in the village of Cairndow.

Cairndow sits on the shores of Loch Fyne, and is situated 10 miles from Lochgoilhead and Inveraray. Several years ago, the community identified the need for a post office in the village, and in 2015, thanks to the dedicated hard work of local people and Here We Are, a local third-sector organisation, the people of Cairndow celebrated the opening of their brand new community-run post office. The new venture has been hugely successful, and I pay tribute to the people at Here We Are and the entire community of Cairndow for what they have achieved.

It is not all good news. Because of a seemingly endless programme of bank branch closures in Argyll and Bute—most notably, the Royal Bank of Scotland’s decision last year to close the last bank in the town of Inveraray—what was a small community-run post office designed simply to meet the needs of a small rural population has become a replacement bank.

Although the post office at Cairndow has always been more than happy to provide a banking service to small local businesses that cannot manage the 60-mile round trip to the nearest bank in Dunoon or Lochgilphead, it fears that it is now in danger of becoming swamped. It has become the bank of choice for many large international businesses that operate in the local area. It reports that its levels of cash-handling have gone through the roof in recent months, as has the amount of time staff have to devote to it. So much of its time is now taken up providing banking facilities for people: it feels that its core business—providing a post office service—is suffering as a result. As we have heard, it is not even as if the efforts to provide that extra service are well rewarded. It is being asked to fill the gaps left by high street banks as they desert rural Scotland.

After all, it is that post office, along with other rural post offices, that has to shoulder the burden of all the additional security concerns. It now holds a great deal more money than it ever had before, and it has had to put appropriate measures in place for the increased cash on the premises. Despite all that extra banking work and the extra security concerns that come with it, it receives scant reward for providing that increased level of service. As one leading member of Here We Are at Cairndow said to me just yesterday,

“We didn’t set this up to become a community bank. We set this up as a community post office, and now we feel as if we are subsidising both the bank and the Post Office.”

When the Minister responds, I would appreciate it if she advised those people at Cairndow that something practical will be put in place to ensure that they are able to continue as a community post office, rather than having the burden of being a replacement bank forced on them. Despite the loss of 20% of my constituents’ rural post offices in the last 13 years and the funding cuts that the Minister has announced, will she provide a cast-iron guarantee to them that there will be no more post office closures in Argyll and Bute?

14:31

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

It is a pleasure to see you in the Chair, Dame Cheryl. I congratulate my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) on securing this important debate. I was pleased to go along to the Backbench Business Committee—my old hunting ground—to support her application. I am delighted that she spoke so well to set out the many issues that post offices face, both now and in the future.

In my own work on post office sustainability, I have concentrated on two things: the deeply unjust banking transaction rates paid by the banks to the post office, and the definition of community post offices, which is unfair to many post offices that are community in practice but not in definition. I was encouraged by the level of interest in those issues in my recent Adjournment debate.

I take this opportunity to apologise to the Minister: my 12-and-a-half-minute speech ended up taking nearly 10 minutes longer than that because of the sheer number of interventions—it was one of the more popular Adjournment debates. That left her insufficient time to respond to the many points and questions that were raised. Hopefully, she will have sufficient time to answer those questions today.

I pointed out during that debate that negotiations were under way between the banks and the Post Office on remuneration. I asked the Government, as owners of the Post Office, to apply pressure to ensure that the rates were fair. That uplift would help ensure the sustainability of our local post offices. On that occasion, the Minister did not give any indication that they would do so, perhaps because of the lack of time. That debate followed a long engagement with concerned sub-postmasters in my constituency, and I know that other hon. Members have had plenty of engagement in their constituencies across Scotland and the UK.

I have been in almost constant engagement with the Post Office on this matter, and I wrote to Ministers and 16 of the biggest banks. The majority of banks responded positively, but one of our biggest banks said that it was not directly involved in negotiations, and that UK Finance was representing the industry and could give further details. That was news to UK Finance, which said:

“UK Finance is not party to negotiations and therefore cannot comment on the specifics of what is a commercial matter.”

I wonder whether that bank—I will not say which bank for fear of embarrassing it, but it is one of the UK’s biggest—was actually party to those negotiations at all.

Despite all that, I was very pleased that last week, following the constructive engagement of the National Federation of SubPostmasters, many Members of this House and the CWU, the Post Office announced that, from October 2019, it will raise the rates of payment that sub-postmasters receive for taking personal and business banking deposits. Those increases represent nearly a threefold uplift on current rates and were warmly welcomed by sub-postmasters at the NFSP conference.

That is a great win for post offices, and, as my hon. Friend said, it is a significant first step towards securing their long-term financial future. One wrinkle remains: the different rates passed on by Post Office Ltd to the various types of post office—local or community, for example. Further engagement with Post Office Ltd on that issue is still required to ensure a level playing field.

That announcement came during the NFSP conference, which resulted in other good news in that, for the second year running, the NFSP Mails Segregation Team’s work has improved sub-postmasters’ mails segregation performance, resulting in a bonus payment of £1.8 million that will be shared among sub-postmasters. The NFSP has said that it will continue to work with their sub-postmasters, with the aim of increasing the size of any future payment and, as I said, it welcomes the changes to this key area of remuneration, which are a significant first step.

The NFSP stressed, however, that there are still some areas of concern to be addressed, including the level of public and business knowledge of the many services that the Post Office provides. Now that it receives a fairer deal for providing some of those key services, it is to its advantage to provide those services to a higher number of customers. That is especially the case with banking services.

Another area of concern, which has been mentioned, is safety. Further changes are required to help protect postmasters from the risks associated with handling large volumes of cash. That has come up in my visits to local post offices and meetings with sub-postmasters.

As we have heard, the post office is a community institution in Scotland and across the UK. As countless household names slip away from the high streets, the post office remains ever present, providing not only postal services, which have become a declining proportion of its business, but benefits administration, banking services and useful public spaces, fewer and fewer of which are now available.

Many of our post offices face increasing pressure and long-term financial uncertainty. In our modern, digital world, with Amazon, online groceries and deliveries, and online banking, many of our small village and town centres—particularly in rural and semi-rural areas—face systemic degradation and challenges unlike anything they have seen before. That comes at a time when large and profitable banks are upping sticks and leaving the high street, so that the Post Office, which already had an important role in our communities, has only become more important and prominent.

The community designation of post offices is a good thing. The Government currently provide funding, administered by the Post Office, to many small town and village post offices once they have received that designation. Designations have to have rules, and the problem is that many rural and semi-rural post offices miss out, while some city post offices, which do not need the additional assistance, meet the criteria. The rules by which branches qualify are set by the Government.

In theory, that funding is supposed to protect those post offices that are the last shop that can provide post office services to the community. However, those criteria are perhaps a little too black and white. One criterion is the distance from any given post office to the next one—a three-mile minimum that is calculated in total ignorance of the situation on the ground. Two post offices in my constituency of Paisley and Renfrewshire North are affected by that: in Bridge of Weir and in Houston.

The Bridge Community Centre in Bridge of Weir—where, incidentally, I have a constituency advice surgery on Saturday morning at 10.30, should anybody need any assistance—[Interruption.] Other surgeries are available, I am sure. That centre is the perfect model for what a real community post office should be; it is run by the local community for the local community. However, because of the three-mile rule, it does not qualify for any community designation funding. The public transport links, which were previously poor, have been slashed in recent months. The centre also does not qualify because there are other retailers in the village who could provide that service, but the fact is that no other retailer in Bridge of Weir wanted to take on the Post Office franchise.

The next closest post office is a 10-minute walk from the nearest bus stop, assuming that someone has been able to catch one of the very infrequent buses and has waited God knows how long to get a bus back to the village. The community was left with a choice: have no local post office, or take it on themselves. They chose the latter, and should be commended for doing so and provided with some assistance. The situation is made worse by the importance of local post offices to the elderly and those with additional support needs. Many people who fall into both groups may already have extra difficulty getting around.

Today, and at other times, I have heard similar stories emerging from other constituencies. The community subsidy remains vital and supports many branches that might not otherwise be commercially viable. Under current plans, the Government subsidy to the Post Office is due to be cut in the coming year and to end entirely in 2021. I strongly urge the Minister to reconsider that course of action, or many more community post offices will close and many communities be left with no post office and no bank.

As we have heard, post offices are closing, and those closures disproportionately affect Scotland. Forty post offices closed in Scotland between 2011 and March last year, compared with 297 in England. When we take population into account, Scotland’s closure rate is one third higher than that south of the border. Given Scotland’s unique and challenging geography, which includes 94 inhabited islands, keeping viable post offices in place is clearly of even greater importance to Scotland than to other parts of the UK.

In conclusion, we must recognise that the local post office is disproportionately important to small towns and rural communities. It has been an institution and often a community lifeline through centuries of change and turmoil. The modern age has not made things any easier for the post office, but I am confident that if the right action is taken it will continue to play its important and irreplaceable role.

I agree with many colleagues from different parties that privatisation is not the answer to that challenge—the Post Office must remain in public hands—and the Government must recognise their role in it. Yes, a Post Office banking deal is a large step in the right direction, but there is plenty more to do, and for my constituents one decisive action that the Government could take swiftly is to review the community designation to pay fairly and pay the right people so that more post offices remain sustainable and stay open for our communities.

14:39

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Dame Cheryl. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on securing this important debate on a critical issue facing many of our constituencies and the nation as a whole.

If we reflect on the decade since the financial crash, in order to avoid wholesale collapse of the UK’s banking system, there has been increasing reliance on the post office network, but an unsustainable model is being visited upon that network. Earlier this year, I met my local postmasters—who, as my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney) pointed out, now represent 98% of post office provision—and they were concerned about the franchising model for the Crown post offices. Of the post offices in my constituency, Possilpark across the road from my constituency office is franchised to a grocery shop; Springburn is still a Crown office but has been actively advertised for franchising; Dennistoun was franchised last year and is now in a grocery store; and Millerston closed and only recently has been advertised for franchising, so that it can reopen.

I first met the chap who took over the Crown office franchise in Dennistoun during the consultation. He was very upbeat and optimistic. He is a young man, an entrepreneur, looking to make a good go of it as a small businessman. I thought that his ideas sounded interesting, and he had some impressive plans for how to lay out the new facility across the road as part of a grocery shop. When he came to see me again earlier this year, I was saddened to hear how he had been “totally conned”—his words—by how the contract was set up.

The main concern was the viability of operations because of the reduction in funding and resource. For example, postmasters now have to rent ATMs at £8,500 per year, with business rates on that. The stores’ income from these machine is only £7,500 per annum, so postmasters pay £1,000 a year to run them. That is madness from their point of view. Why on earth would they do that?

The Government have invested £1.3 billion in the post office network, but I am afraid that that money has not fed down to the franchise holders. The withdrawal of RBS entirely from my constituency was followed by the recent announcement that Santander will close its last branch in the constituency. It has said, “Don’t worry: the post office network will take up the slack,” but that network does not look too resilient, and it certainly does not look like it has a promising prospect of picking up the slack.

Banking contracts with the new post office franchises have changed. Postmasters used to receive 70p per £100 to provide banking services, but they now only receive 31p per £100, which is clearly a massive change and financially unsustainable. That has combined with the huge restrictions that have been imposed on credit unions extending their bonds so that they can bail each other out. In the past few months, my constituency has lost a credit union. Previously, other credit unions could rally around to share capital so as to avoid one union failing, but the big banking lobbies have prevented that with the current restrictions. As a Co-op MP, I see a picture in which changes to commercial banking, restrictions on co-ops and the huge undermining of the post office network have been severely detrimental to local finances. That combination has been a toxic recipe for the provision of banking services across this country.

Earnings for post office franchise holders and sub-postmasters have been eroded to such an extent that they believe that cash starvation will lead to the closure of many post office outlets. They think that post offices should go back to the model in which they were run as Crown offices. Many of them clearly cannot wait for the franchise contract to end, so that they can simply walk away from it. It is so toxic for them that they cannot wait to throw away the key and board up the premises. That is the sad situation. At the start, there was a great deal of hope, with entrepreneurs trying to make a fist of it, but they were undermined by how the contracts have worked out, which is a great tragedy.

Postmasters in my constituency believe that their ability to provide a service and employment in the area has been severely eroded, and that retail operations within the franchises are not enough to avoid closure and to survive. It is a real cliff edge. The worry is that when this phase of contracts expires, we will see a massive collapse in the post office network. This is a ticking time bomb. Unless the Minister recognises the cracks that are appearing in the structure of the system, we will see a massive failure of the post office network within the next five years. The Minister needs to be aware that a crisis is brewing in that network.

If the Minister is interested in dealing with the situation, the contracts should be renegotiated—as the sub-postmasters who saw me believe—to allow not only service provision but the ability to earn a reasonable living. That is not a great ask of Government. They just want to run a business that is genuinely sustainable, and to earn a small profit—a living—so that people are happy. That is not how it works now, because the dice are loaded against them.

The CWU, of which my hon. Friend the Member for Coatbridge, Chryston and Bellshill is a proud member, actively opposed the franchising of the Crown post offices. However, the National Federation of Sub-Postmasters was in essence bought off by Post Office Ltd—sub-postmasters were paid into, but part of the conditions of those payments was that the national federation would not undertake any activity that undermined the reputation of the Post Office and brought it into disrepute. It is a trade union in name only—it is a sham.

If the Minister is serious about proper scrutiny, sub-postmasters need to be given proper independent recognition as workers, and to be allowed to organise in proper trade union fashion. That would be a helpful measure to improve scrutiny of the system. Employees of the post office network believe that they are 39% underpaid for their efforts. Clearly, where there is under-representation of workers and organised labour, there is underpayment and exploitation, and as my local sub-postmasters illustrated to me, that is exactly what has happened.

The situation reflects the wider issues of investment in banking in this country. In 2016, public and private investment levels in the UK stood at 17% of GDP. We are ranked 24th out of the 28 EU countries, and a pathetic 118th in the world rankings. That is a shabby record for the UK, and it speaks to the wider crisis in our economic potential as a country. We need to get a grip of that urgently.

That is why I welcomed the post bank proposal released at the beginning of April, which gained great press attention and traction as a credible and costed idea that would not only ensure the sustainability of the post office network, but create a reliable high street banking facility owned and run for the public interest. It is a plan to revolutionise the banking ecosystem, and to address the serious issues that we face, by, for example, ending the failing partnership between the Post Office and the Bank of Ireland. That partnership was forged after a massive public bail-out of the bank, and a condition of it was an exit from business banking activity. As a result, the Post Office is not able to grow its market share in small and medium-sized enterprise lending, and to help the growth of local businesses, which is stifled by a lack of lending. If we combine that with the restrictions on the credit union network, we see a recipe for constraining the growth of our economy and business activity in the UK.

That issue would be a priority for the new post bank, which would be welcome news for the sub-postmasters in my constituency and many others around the country. The post bank, which would be seeded with £2.5 billion in capital, is not controversial at all. Indeed, 65% of the public support the reintegration and renationalisation of the Royal Mail and the post office network as a unified whole. The UK’s own version, Girobank, was privatised as part of the great fire sale of assets by the Tories in the 1990s, even though a fifth of people worldwide have banking services through post office networks in their respective countries.

The new model for the post office network would be larger by far than any of the existing bank and building society networks. There would be 300 branches in Scotland alone. A post bank would be embedded in local communities, and would be given a decentralised decision-making structure, and a specific mandate to support small and medium-sized enterprises and social enterprise, tackle financial exclusion and promote inclusive economic development. It would be a lending arm of the proposed new national investment bank that Labour also plans to launch, and therefore would lead to a wholesale restructuring and repositioning of the UK economy, enabling patient finance to be seeded in our communities, and enabling greater vitality in communities that have seen significant industrial and economic decline over the last 40 years.

A solution is clearly at hand that would save our post office network and provide banking services where high street banks have disappeared. It would use a new banking model that is far more sustainable and will lead to far greater stability, growth and prosperity across the United Kingdom. I urge the Minister to take those proposals seriously, if she has any serious interest in addressing the crisis facing our post office network and those who work in it.

14:51

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Dame Cheryl. I congratulate my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) on securing this debate on a matter that is critical for many communities in Scotland and the other nations of the UK. She talked about the respect for, and recognition of, post offices. Few things upset communities more than a post office closure. She also pointed out the folly of the Tory Government’s non-intervention policy, and the parlous state of sub-postmasters, following the cuts that they have had to endure to their livelihoods.

My hon. Friend rightly mentioned that it is good news that there is a new banking transaction deal, but why the six-month wait? There is no good reason for that. It should happen now. She talked about the consequences of poor pay, and the 1,016 temporarily closed branches, 134 of which—some 13%—are in Scotland. She talked about the effect of Crown branch closures, and the failure of the franchising system to recognise unions, which others mentioned, too.

The hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) talked about his worried constituents and the desire to protect the network. It is a telling figure that one in five sub-postmasters is considering closing or reducing their services. His speech was good up to then—until he said, as is usual for the Tories, that he wants the Scottish Government to pick up after the failure of the Westminster Tory Government, without the powers or levers to be able to do so.

[John Lamont]

My point was that powers are available to the Scottish Government to support the provision of financial services through the post office network—a point that the Library has just confirmed. There are opportunities available to the Scottish Government to provide additional assistance beyond what the UK Government can provide, because post offices are a reserved matter. There are levers and powers available to the Scottish Government, if they choose to use them.

[Drew Hendry]

I do not intend to go too far off track, but I must respond. It is absolutely typical of the Tories to say that we have to fix every mess and failure at the expense of the Scottish public and services in Scotland. That is a ridiculous proposition.

Returning to the core debate, there was enormous consensus among hon Members. My hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) pointed out that businesses across communities lose money if post offices close. She said that people are cynical about the politics of the Westminster Government, who make no commitment to post offices and then wring their hands at the consequences. She talked about hand-counting thousands daily, and everything that involves. She talked about the post office being the last place for face-to-face contact in communities. It is more than just a commercial entity, and older and more vulnerable people are the most affected by closures.

It is telling that Later Life Ambitions, a pensioners’ organisation, points out that the post office is important in day-to-day life, because older people, who are often the most vulnerable people in society, rely on post offices. They are a lifeline; they offer access to pensions and benefits, and let people pay bills, get advice and even socialise. Does the Minister acknowledge that this is a social issue, too? For those who do not or cannot communicate digitally, post offices are very important. They are used by 42% of consumers over 65, and 31% of disabled consumers.

The hon. Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney) talked about working with my hon. Friend the Member for Motherwell and Wishaw, and about post offices needing to be run in the interests of people. That is absolutely correct. In talking about franchising policy, he highlighted that WHSmith has been voted worst retailer. It is notable that the jobs it advertises are particularly low-paying.

In a very telling speech that hit home with me as a fellow MP representing a rural community in the highlands and islands, my hon. Friend the Member for Argyll and Bute (Brendan O’Hara) shared concerns that post offices are being run down and prepared for privatisation. He talked about the catastrophic effect that can have on rural communities, particularly in the highlands and islands, where often there are huge distances between the services that people rely on. My hon. Friend talked about the stability policy of the UK Government; Argyll and Bute has lost 20% of its post offices, with six post office closures in the last two years. The drastically reduced funding has put post offices in a very vulnerable place, and the public have no faith in the UK Government protecting rural post office services. He was also right to point out the success of Cairndow, and to congratulate those people on taking matters positively into their own hands to try to do something for their communities.

My hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands) talked about the transaction charges, and so he should, because his work should be commended. I congratulate him on forcing action, not only through his Adjournment debate, but through continued pressure and engagement. He talked about the impact of the systemic degradation of services in towns and villages and, importantly, the issue of community designation. It is a good thing to have community designation, but the problem is that rural and semi-rural post offices are losing out, while cities can gain. The criteria are too black and white, especially the three-mile rule.

The hon. Member for Glasgow North East (Mr Sweeney) talked about the unsustainable model imposed on the post office network, and shared his concerns about franchising. When there are bank closures in our communities, we have all been told, “Don’t worry; the post office network will pick up the slack.” He also talked about the toxic conditions for the people who run post offices, many of whom got into the job because they thought it was a great thing to do for their communities, a proper career and a valued position in the community. My goodness, how they have been let down by how they have been treated. He predicted a massive failure over the next five years if there is no action.

[Philip Davies in the Chair]

Post offices are not just business; they are focal points for many communities. This issue is about communities and their health and wellbeing, as well as the national and local economic impact. For many, the shiniest jewel in the crown has been prised out and cut up for the profit of those who do not rely on or even need a post office. In 2017, Citizens Advice found that people valued their community post office more than a local pub, a bank branch or a library. Does the Minister acknowledge that importance? In rural areas, 36% of businesses use post offices at least weekly, and 62% of small businesses use them at least once a month. Over 500,000 businesses are registered in rural areas—that is one in four companies—and they contribute more than £200 billion to the economy. These people are creatives and innovators who use post offices to send goods and pay bills. According to Citizens Advice, eight out of 10 of them will lose money if local post offices are closed. Will the Minister take notice of that?

We in the SNP—and others, as we have heard—are clear that we want our Post Office to remain robust, and to serve our businesses and communities, but that is not a priority under the UK Government’s management. Consequently, the Government should devolve power to us to ensure that the Post Office is protected. Under the current policy, there has been a mass exodus of postmasters, often leaving communities branchless. My hon. Friend the Member for Motherwell and Wishaw should be commended for arguing for fair hourly rates for postmasters, but the Minister must undertake to commission independent analysis and answer the big questions about fairness.

As we have heard, pay levels are leading to a major exodus of postmasters. Rather than watch the Post Office crumble, the UK Government should support postmasters and ensure fair remuneration. As was pointed out, the publicly owned Post Office’s North Star initiative is aiming for a £100 million profit by 2021. That is all very good, but postmasters’ pay has declined by £107 million since 2012. The majority of postmasters now earn less than the minimum wage. In many cases, they cannot even get out; their businesses are now too unattractive to sell.

The National Federation of SubPostmasters has raised the issue of sub-post office closures with the UK Government and the Government-owned Post Office Ltd. The federation’s spokesperson said:

“Our records show around two-thirds of closures are due to the resignation of the sub-postmaster— and a survey of our members conducted earlier this year gives an insight into why sub-postmasters are resigning. Income is dropping over time, the majority earn less than the national minimum wage for running their post office—and therefore earn less per hour than their staff—and as many as a third took no time off last year.

We agree with Marion Fellows that Scotland has been hit hard by sub-post office closures. This is a particular problem for rural areas in Scotland, as well as across the UK, where people rely on their local post office for vital postal and banking services.”

Action on transaction charges is welcome, but why wait? Why not give the same rates to local branches and main post offices? Around 90% of post offices in the highlands and islands are local branches, not main post offices. Will the Minister challenge that with the Post Office? As my hon. Friend the Member for Motherwell and Wishaw pointed out, there must be a vision for the post bank, and it should be properly funded.

There is more pressure on post offices than ever, given the loss of local banks through short-sighted closures by the Royal Bank of Scotland, Halifax Bank of Scotland and others. Now we find that TSB is starting the process of shortening hours, which is always the cynical first move in reducing a branch’s viability to the point where its closure can be justified. As we heard, all those banks say, “It’s okay, you can use the post office,” but we cannot if they have gone.

Even where post offices remain, Robert Cockburn, a constituent of mine who runs the post office in Drumnadrochit, says the workload is absolutely punishing. He often has to run his business as a single-manned operation, so while he goes behind the screen for the time it takes to deal with a transaction, he loses out on custom from people who come to his business and might have bought goods to help sustain him.

[Brendan O'Hara]

While we have been sitting here, I have received an email informing me that yet another bank branch in Argyll and Bute is planning to cut its numbers ahead, I believe, of closure. The TSB branch in Dunoon now says its customers have to travel what it calls 7 miles to their nearest branch, seemingly unaware that that journey involves a ferry and a bus. Yet again, it is death by 1,000 cuts to financial services in rural Scotland. Will my hon. Friend join me in utterly condemning that latest move.

[Drew Hendry]

My hon. Friend is absolutely right, and I join him very robustly in condemning that move. As I said a moment ago, shortening hours is the first step towards making a branch unviable so it can no longer do business. The call then goes out, “Don’t worry, the post office will pick up the slack.” As we know, that is not always the case.

My constituent Mr Cockburn says it is punishing to run his post office. He told me:

“It is a combination of everything. The work that we have is onerous and does not pay enough money to cover your time. The business banking, for example, we get paid 23p per £1,000 that we count. That’s nothing. You think, on minimum wage, how long it takes you to count £1,000. If you make a mistake or”—

more commonly—

“if the customer’s made a mistake you have to double check it. We get paid for taking a parcel over the counter, but the Post Office took 6% away from us on that because they gave us a faster printer and said we could print labels faster. It’s ridiculous.”

A rural post office gets to print a label faster, and the Post Office cuts its money for doing so. That is ridiculous.

The UK Government must ensure that there are more incentives for new and existing postmasters to maintain and open post offices. Union officials rightly have been clear about the folly of closing Crown offices and franchising the service. As we have heard, franchises often advertise jobs at a lower rate than the Post Office pays. As the all-party parliamentary group on post offices found, the Post Office has no back-up plan in the event of WHSmith failing to deliver the service.

I hope the Minister has taken clear cognisance of what has been said during the debate by people representing their constituencies and communities, the vulnerable people who need these services most, and the postmasters who are being forced into subsistence living and locked into a business they simply cannot afford to get out of. This is a matter of having a social conscience and ensuring that communities have something they can rely on, not just now but into the future. If post offices are going to have to pick up the slack of bank closures and other things, they should be allowed to become sustainable in order to do that job.

15:07

[Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)]

It is a pleasure to serve under your chairpersonship, Mr Davies. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on securing this important debate. She is an ardent advocate for her community and speaks passionately about the importance of post offices to our local communities. I also thank the CWU, the National Federation of SubPostmasters and all those individuals who work very hard in a cross-party and collegiate way—they know who they are.

The post office is an important bastion in our local communities. It is a long-standing British institution, trusted and loved by the public. It is there for individuals as well as local businesses. Polls by Citizens Advice and others show that the post office is one of the most important services in the local community and, as many have pointed out, it is vital for rural communities. One in five rural residents said in response to a Citizens Advice survey that they would lose contact with friends or neighbours were it not for the post office.

Importantly, post offices are often a lifeline for older people in our communities. Later Life Ambitions, an umbrella group representing more than a quarter of a million pensioners, is clear about the significant importance of the post office to the security, independence, mental health and wellbeing of older people. It stated:

“The Post Office matters to older people both for the services it provides directly to them, but also for the role it plays in supporting the local businesses on which older people often rely.”

Indeed, at a time when our high streets are struggling, the post office is an important economic backbone for our local high streets. It offers small businesses the opportunity to do business locally and provides that important link that ties in the community. More than ever, we need to protect and encourage the growth of post offices. Unfortunately, the Government are overseeing a managed decline of the service.

Since 2010 we have seen cuts to branches and services and a fall in remuneration for sub-postmasters. The hon. Member for Motherwell and Wishaw told us eloquently—and scandalously—of the 1,016 temporary closed post offices throughout the UK, which is a terrible state of affairs for the communities affected. Most notably, we have seen a significant reduction in the Crown post office branches: the high street branches that provide the widest range of services, that are easily accessible for local communities and are inclusive of people with disabilities.

Over the past five years the Post Office has announced the closure of 150 Crown post offices, which is 40% of its 2013 Crown post office network. Most have been transferred to retailers such as WHSmith to install a counter for post office services in other premises. Although that retains a level of provision in the area, it is often done in the face of substantial local opposition and with a significant reduction in services, accessibility and well-paid jobs. The removal of high street branches away from view is contrary to economic sense. My hon. Friend the Member for York Central (Rachael Maskell) was unable to attend today, but she has made important points about her local post office, which was in a prime location in York, but is now being moved into a WHSmith in a more remote area of the town, where shops are closing and where the level of footfall is not as high as it was before. In some cases, post offices have been relocated to retail units close to existing ones. I can speak for a sub-postmaster in my constituency, where another outlet was allowed to open a post office about a mile away from his business, and he is really seeing the hardship of that and wondering whether he will be able to continue.

Furthermore, transferring post offices to retailers such as WHSmith could be perceived as risky in a climate that has seen our struggling high street stores closing at alarming rates. At an all-party group on post offices meeting in October last year, I was surprised when Post Office executives gave me and other Members no reassurances of any contingency planning in the event of difficulties facing WHSmith. I urge the Minister to provide us with an insight into what assessment she has made of the long-term sustainability of that partnership as a matter of urgency?

As the modernisation programme continues, we are also seeing a gradual retreat of Post Office financial services. Instead of growing services, only last month it announced it will close the Post Office Money current account, which serves 21,000 customers. And the end is in sight for the Post Office card account, which will hit many people hard if they are in vulnerable circumstances and do not have the income to open a bank account in a high street bank.

Rural communities in particular rely on the post office to access financial services. Removing those services leaves consumers vulnerable to even further financial exclusion. To have a sustainable future, we have to be bold and brave about what our post office can offer. That is why I am delighted that the Labour party has announced we will set up a post bank to deliver banking services through post office branches, including relationship banking with small businesses. By utilising the extensive network of post office branches, the post bank would have by far the largest branch network of all UK banks. The report that has looked into the matter estimates that more than 3,600 post office branches are suitable to provide banking services, or would be with a small amount of capital investment. With the branches spread evenly across the country, every community would have easy access to face-to-face banking in their local branch of the post bank.

We have to recognise that we must invest and encourage our trusted institutions and not let them down. Does the Minister agree that a post bank could form a creative and bold answer to the long-term sustainability of the post office network and to the receding presence of banks on our high streets?

Beyond the closures and the fall in services, we also see the Post Office squeezing hard-working sub-postmasters’ remuneration. Sub-postmasters play a significant role in the running of the post office network. My hon. Friend the Member for Glasgow North East (Mr Sweeney) told us about his postmaster who felt conned into setting up the business and could now face financial ruin and also hardship to the community that he set up to serve. It simply does not make sense. Some 98% of the post office network is run by sub-postmasters—mostly individual, independent business people—but remuneration for sub-postmasters has fallen in recent years.

In its 2017-18 annual report, the Post Office reported that the amount paid to sub-postmasters had fallen by £17 million since 2016-17, a reduction of 4.4%.The fall in remuneration is pushing them out of business, and many have to endure months of below minimum wage pay, all under the party that claims it is the party of business. What assessment has the Minister made of the remuneration for sub-postmasters? Can she share any insights with Members of the House? Does she not agree that the Government should carry out an urgent review to prevent more closures and more hardship, and the terrible tragedies of people who have set up a business in all good faith then facing financial ruin?

In this debate, there is an elephant in the room. I thank the Minister for meeting me to discuss the matter privately, where I was able to raise my concerns. As we know, a group of sub-postmasters has launched a legal case against the Post Office on an issue surrounding its IT system. I do not want to go into details as the case is ongoing and will probably last until 2020. As I highlighted earlier, there is a relationship of trust between the public and the Post Office. It appears that some light has been shed into some of the practices and behaviour that appear to run deep into the psyche of the organisation. I hope the Minister will consider that a broader review into the management and governance structure of the Post Office, and whether the Government have fully exercised their oversight functions, or whether those powers need to be significantly strengthened, might be required to assure the public and to commit to the long-term sustainability of the network.

I have outlined only some of the matters that bring into question the long-term sustainability of the post office network. Many Members have made their views known in this and previous debates about how those matters exercise the communities that they represent. To secure a hopeful future for it, we must address the issues. We have to address the closures by ending them and the declining financial services by being bold and creative. We have to address the retention of a network of experienced staff by ensuring that they are properly remunerated and looked after. Finally, we have to address the issues raised in the justices’ findings by reviewing the overall governance of the Post Office.

15:17

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)]

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael), and the hon. Members for Motherwell and Wishaw (Marion Fellows) and for Paisley and Renfrewshire North (Gavin Newlands), on securing today’s important debate on the sustainability of the post office network.

As I have said many times before, I am always happy to challenge the Post Office on specific concerns that MPs have at constituency level. I am therefore grateful to hon. Members for their contributions. It is encouraging to see that all sides of the House share common cause in ensuring that a vital national asset continues to serve our constituencies for many years to come. It is because of the key role that post offices play in service to their communities that our 2017 manifesto committed to safeguarding the network.

[Brendan O'Hara]

Will the Minister join the consensus across the House to support the retention of the post office network in public hands?

[Kelly Tolhurst]

If the hon. Gentleman would allow me the courtesy of getting to the content of my speech, that would be really useful. I am still at the start. We made a commitment in our 2017 manifesto and are committed to safeguarding the network. The Post Office is publicly owned and it is a commercial business operating in competitive markets. The Government set the strategic direction for the Post Office to maintain a national network, accessible to all, and to do so in a more sustainable way for the taxpayer. We allow the company the commercial freedom to deliver that strategy as an independent business.

I must point out some of the language and words used in the debate, such as “managed decline” and “undermining the network”, and the idea that it is ideological of the Tories to run down post office branches. As the Minister responsible for post offices, I find that incorrect and inaccurate. I do not regard Government investment of £2 billion over eight years as a so-called managed decline or undermining of the network, and I do not regard the establishment of 450 new locations since 2017 as managed decline or an undermining of the network. As hon. Members have outlined, at the end of March there were 11,547 branches. That number is as stable as it has been in many decades, so I refute those claims.

[Patricia Gibson]

I hear the Minister’s objection to the term managed decline, and that is fine. We are allowed to disagree with each other in this Chamber; we have that privilege. However, there is no plan in place in the—I think not unlikely—event that WHSmith completely collapses. It has declined over 14 years. Would she care to take that up?

[Kelly Tolhurst]

I thank the hon. Lady for her comment, but I highlight that WHSmith has been successfully running post office franchises since 2006. We are now in 2019, and the reality is that, in any franchising service and any business, work is always going on behind the scenes in regard to the management of the network. There is a massive network of 11,500 outlets throughout the country. As the Minister responsible, I will, quite rightly, challenge the Post Office on any issues I am told about. I am committed to maintaining that network.

I have highlighted that so early in my speech because ever since I have had this role I have been clear at the Dispatch Box and in any debate that I will talk to any MP about issues they have in their constituency about post office branches. I will also talk to anyone about the Post Office and take those issues forward to challenge it. I will also defend the Post Office when required.

[Several hon. Members rose—]

[Kelly Tolhurst]

I give way to the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry).

[Drew Hendry]

The Minister is making a powerful statement of commitment, but she has heard from around the Chamber the pressures faced by local post office sub-postmasters living on subsistence terms and struggling to maintain a living. Will she bring that enthusiasm, energy and commitment to sorting out their livelihoods and securing their post offices?

[Kelly Tolhurst]

I thank the hon. Gentleman for that, because that is exactly what I hope to do.

[Gill Furniss]

I want to continue on the point about contingency planning. At an APPG meeting some months ago, when we questioned the management who had turned up to talk to us about various things, it was clear that they had no contingency plan whatsoever should WHSmith fail. It is okay to say they have been doing it since 2006, but so have NatWest, HSBC and TSB, and now we see them disappearing from the high street. It is crucial that the Minister takes that seriously. If she did not know that the Post Office had no contingency plans in place, its keeping her in the dark is a serious omission on its part.

More generally, at that APPG meeting the management told us that the consultation was not worth the paper it was written on and that they would not take notice of any views from individuals or communities. Indeed, the only reason they were asking was to see whether there were any comments on disabled access. I asked them why that was the case, because they have a duty of care to look at disabled access and to listen to communities.

[Kelly Tolhurst]

I understand where the hon. Lady is coming from, but the reality is that 98% of the post office network is franchised. That is the fundamental business model within the Post Office and its distribution of services. The hon. Lady makes a presumption that WHSmith will fail, and its franchises will therefore be under threat. That does not take into account the potential future development of the Post Office and how we are challenging it. However, as I have outlined today, and in any conversation I have had with any colleague, when hon. Members highlight something to me, I will, as the responsible Minister, always raise that with the Post Office.

In my day-to-day role, I will always challenge the decisions and workings of the Post Office. However, while we are the Post Office’s shareholder, it is commercially run, so it is within its rights to manage operational delivery, but it is for me to challenge, oversee and raise questions where I believe work is needed to resolve matters.

[Hugh Gaffney]

I will keep it short and sweet: will the Minister ask WHSmith why it will not talk to the CWU, and ask it to talk to the CWU to represent members properly?

[Kelly Tolhurst]

I understand the hon. Gentleman’s concern about the CWU and perhaps the conversations with WHSmith, but the union’s relationship with an independent retailer such as WHSmith is a matter for it. It is not for me to direct an independent business. I know the hon. Gentleman and his passion for this subject well, so I am sure he will do all that he can, in his role and with his experience, to ensure that communication takes place.

[Gavin Newlands]

I had the time to advertise my surgery on Saturday in my speech, and I look forward to attending the Minister’s Tea Room surgery, where we can discuss some aspects of my speech in more detail. For the public record, will she give me and the people in Bridge of Weir and elsewhere in my constituency a commitment at least to look at the community designation of post offices? I am asking her to commit not to changing that but to looking at where there may be shortfalls.

[Kelly Tolhurst]

I am always happy to look at the details and where we can improve services if that is possible. I must point out that the post office network is long established and well loved. We love the people who work in our post office network: the sub-postmasters and the workers—[Interruption.] Hon. Members might heckle, but we do. The Government definitely do, and rightly so.

I have outlined this afternoon my personal commitment to the post office network, as we did in our manifesto, to see where we can improve it and where we can all work together to secure the future sustainability of a strong network throughout the country. There are challenges ahead, just as there are within retail. They are not insurmountable, but the challenge for us is to work with all of our stakeholders to tackle those and secure the network for the future.

The facts clearly show that the Post Office has made substantial progress over the past decade. The inhibiting cultural legacy of being a lesser partner to Royal Mail, with high public sector costs, has almost disappeared. As a business, Post Office Ltd is increasingly profitable and takes action to consolidate and defend its position in the market. Between 2010 and 2018, we backed the Post Office with nearly £2 billion to maintain and invest in a national network that had 11,547 post offices at the end of March. That extensive network gives the Post Office a unique reach among service providers. The Post Office currently meets and exceeds all the Government’s accessibility targets at a national level.

[Patricia Gibson]

I appreciate the amount of investment that the Minister is talking about; it is clearly a lot of money, although people might want a debate about whether it is enough. In spite of that investment, does the Minister understand the concerns raised today? In Scotland 22% of the entire post office network has closed over the past 15 years. Surely she, like me, laments that figure because of the scale of loss it represents.

[Kelly Tolhurst]

The hon. Lady is right to raise those concerns. She is also right that we are concerned about any particular closures that may happen, as is Post Office Ltd. That is why Post Office Ltd works hard—it always works hard—where there are unforeseen closures to make sure that those branches reopen. Since I have been in post there have been a number of examples where I and local MPs have worked with the post office network and local communities to make sure that new facilities are opened.

Where there have been closures, I would always encourage people to raise them with Ministers and to work with Post Office Ltd to make sure that we can sustain the network. The hon. Lady is right to have concerns, but she is wrong to say that the intention is not to renew those branches and not make sure that the network is stable in Scotland. There is a commitment and a desire to achieve that.

Government investment has also enabled the modernisation of over 7,500 branches, added more than 200,000 opening hours per week and established the Post Office as the largest network trading on Sundays. In terms of services provided, the Post Office’s agreement with the high street banks enables personal and business banking in all branches, ensuring that every community has appropriate access to cash and supporting consumers, businesses and local economies in the face of bank branch closures, particularly in rural and urban deprived areas. I encourage the House to look closely and objectively at these facts; they show unequivocally that the network is at its most stable and is much more sustainable today than in 2010.

We are not complacent. Post Office Ltd has to keep exploring new business opportunities to ensure a thriving national network for the benefit of communities, businesses and postmasters up and down the country. One of the most important and visible aspects of the Post Office strategy is its franchising programme. I accept that some communities have a strong emotional attachment to Crown post offices and naturally there will be concerns when proposals come forward to franchise their local branches, but our high streets are facing unprecedented challenges and the Post Office is not immune to them. Just like any other high street business, it needs to respond to these pressures and adapt to changing customer needs.

Franchising has reduced the taxpayer funding that the Post Office requires from Government, while maintaining—and, in some instances, improving—customer service levels. In fact, the report by Citizens Advice in 2017 indicated that franchised branches are performing in line with or better than traditional branches. I reassure hon. Members that, as part of its ongoing monitoring role, Citizens Advice will continue to track the impact of post office changes on consumers and on customer satisfaction in respect of post offices. Citizens Advice also has a formal advisory role in reviewing changes to Crown post offices across Great Britain that are relocated and franchised.

Serving rural communities is at the very heart of the Post Office’s social purpose. There are over 6,100 post offices in rural areas and virtually everyone living in such areas is within 3 miles of one of those branches. Last year, a study by Citizens Advice found that seven out of 10 rural consumers buy essential items at post offices and almost 3 million rural shoppers—that is, 31% of rural residents—visit a post office on a weekly basis, compared to 21% of people living in urban areas. The importance of post offices to rural areas is illustrated by the fact that almost half have community status. They are the last shops in the village, as hon. Members have outlined. Rural post office branches, whether main, local or traditional, can offer the same products and services as urban ones of the same category.

The Post Office recognises the unique challenge of running a community branch and supports those postmasters differently from those in the rest of the network. They receive fixed remuneration, as well as variable remuneration, to reflect their special situation. In addition, the Post Office delivered almost £10 million of investment via the Community Fund between 2014 and 2018. That enabled community branches to invest in their associated retail business. The Post Office has now launched a smaller community branch development scheme that will benefit an anticipated 700 branches. Let me be clear: this Government and the Post Office will continue to support rural post offices.

Some hon. Members raised concerns about the rates of remuneration paid to postmasters, especially for banking services; I, too, have been and continue to be concerned about that issue. While the contractual relationship between Post Office Ltd and postmasters is an operational responsibility for the company, I care deeply about the issue and I am determined to make sure that running a post office remains an attractive business proposition.

We offer post offices several ways of doing that, including the development of services for the future. My challenge to people thinking of taking on a franchise or a post office is to make sure that they deliver the services demanded by consumers and therefore enable post offices to continue to be relevant in today’s market, given the way consumers use services now compared to the past.

I have committed to meeting interested parties, including the Post Office Ltd and the National Federation of SubPostmasters, more regularly so we can ensure that particular issues, case studies and direct concerns are discussed and challenged on a more frequent basis, and we can all work together. Everybody in this room and all our stakeholders want to see the Post Office thrive and develop in the future. Some Members may regard me as having a different ideological view: there may be different ways of getting there, but the outcomes should remain the same.

[Gill Furniss]

The Minister talks about her passion for post offices and how everyone will work together. Would it not make more sense to have a review of how things are working at the moment? As I and others have mentioned, having a friendly little chat probably will not work. We urgently need a proper review of the governance and management and of the remuneration of sub-postmasters.

[Kelly Tolhurst]

I appreciate that the hon. Lady would like me to announce that we will hold a review, but fundamentally, as I have outlined, the Post Office is a commercial entity operating in a competitive market. It is owned by the taxpayer, and it is right that we are challenged and that it is run efficiently.

I point out that the Post Office has been making a surplus. We now have a sustainable network and a surplus. We have moved on from a time when there were more than 7,000 post office closures and the Post Office was over £1 billion in debt. We are not in that place today. That has been achieved by maintaining the network and investing correctly. However, I have tried to show that I understand hon. Members’ concerns about the viability of postmasters and their pay. I hope I have already outlined and expressed my determination to get to the bottom of some of these challenges and to ensure that they are addressed by the Post Office.

[Drew Hendry]

The Minister is being generous in taking interventions, and I appreciate that. She speaks passionately about her commitment to investigating this, and has commented that she believes the network is sustainable and well invested in at the moment. Will she take that a step further by coming to speak to some of the people running local post offices, particularly in the highlands and islands? They might not recognise the fact that they are within three miles of communities or that they have that kind of investment, because that is not their lived experience. Will she take up that invitation?

[Kelly Tolhurst]

I thank the hon. Gentleman for that invitation. I do speak to postmasters and, if time allows, I will be happy to go and visit post offices in any part of the country, if possible. However, we really need to look at the network and understand the operation. Post Office Ltd operates more than 11,547 stores—a sustainable network. In many of those circumstances, there will be particular differences. Of those stores, 98% are franchises, which in effect are businesses in themselves. It is acceptable to expect that there will be some churn and there will be particular issues that need to be dealt with.

[Gill Furniss]

indicated dissent.

[Kelly Tolhurst]

The hon. Lady shakes her head, but that is the reality. I apologise to her, because she is always very courteous to me in the many debates we have. At some stage or another there will be issues with a number within the network, and it is right that those are raised and that we deal with them. This is not something I like to accept, but sometimes there will be cases that cause problems, and the right course of action is to have debates such as this, to challenge me or whichever Minister is responsible and to ensure that we work to ensure that those particular branch or constituency issues are dealt with.

Part of the changes to the network involved moving from fixed and variable remuneration to a fully variable basis, based on transaction fees. That means that it is now important that a post office service is combined with a good retail offer to be successful. At the same time, fixed remuneration remains in those rural and remote locations where that approach is just not viable.

Post Office Ltd is not complacent and periodically reviews the rate of return on all services for postmasters to reflect the time and effort involved. For example, last year the Post Office increased remuneration on banking deposits twice to reflect the increased demand for services. I thank hon. Members for their positive comments about the increase announced last week to remuneration for postmasters for banking transactions; as hon. Members have outlined, that has doubled or in some cases tripled the fee payable to postmasters. Where possible, Post Office Ltd will continue to use the renewals of commercial contracts as opportunities to negotiate improved rates that can be shared with the postmaster.

I will answer a direct question put to me about why the Post Office is bringing forward the increase in charges only in October and why it is not happening before that time. The Post Office has taken the decision to implement the new banking framework payments to postmasters one quarter before the new negotiated banking framework comes into play. I understand that postmasters may be concerned, but the Post Office has acted to bring that in early and to enable the uplift to postmasters as soon as practically possible.

I want to pick up on one point raised by the hon. Member for Glasgow North East (Mr Sweeney), and give him some more information on cashpoints. He raised a concern about a post office having to pay the Post Office for that machine. Under its agreement with the Bank of Ireland, the Post Office pays post offices for the provision of the machines; they are remunerated for that. I would not be able to comment on any private agreement between an individual post office and another provider for the cashpoints. I would very much welcome further information after the debate, and I am happy to look into the issue for him.

[Mr Sweeney]

The additional concern is that the ATM footprint is subject to business rates, which is obviously a cost borne by the franchise holder. That is money over and above that received from Post Office Ltd, and it therefore represents a financial detriment to the franchise holder. The Minister needs to come up with a mechanism to offset that cost to the business, because otherwise it is unsustainable.

[Kelly Tolhurst]

As the hon. Gentleman knows, the Government have been working to make business rates more equitable for small businesses, and we are looking at the impact of that. Post offices will have benefited from that work. He mentions costs that he has been made aware of; if he lets me know that particular constituency issue, I am more than happy to take that forward. As I have outlined, under the Bank of Ireland agreement with the Post Office, postmasters are remunerated for, rather than being expected to pay for the privilege of, delivering that service for our communities.

On the question of cashpoints, as we are faced with bank closures, which is a problem that we all very much agree on—they have deserted our high streets—it is for the post offices to pick up the slack in some cases. That is why this Government, with the Post Office, have been negotiating strongly on the new banking framework—to get a better deal for the postmasters who are delivering services that we all rely on in our high streets and communities.

The question of accessibility in the franchise branches has been raised. Franchising means that a post office presence can be maintained in town and city centres in a way that not only makes financial sense, but ensures that services are more accessible to customers, for example through the provision of extended hours and Sunday opening. Post Office Ltd is wholeheartedly committed to ensuring that the needs of the community and its customers are met in any relocation. That is why the Post Office consultation encourages the community to share its views on all matters, including issues related to accessibility under the Disability Discrimination Act 1995.

Post Office Ltd and its franchise partners have stringent rules regarding access to post office branches, which meet all relevant legal requirements, to ensure that all customers, including those with disability or mobility issues, can access their branches. The Post Office also runs local consultations in order to engage local communities, so that they help to shape its plans. The Post Office does not seek a mandate for the franchising, but consults on practical aspects of a proposed relocation, such as service provision and accessibility.

[Hugh Gaffney]

The Minister mentions communication. Has she met the Communication Workers Union about post office closures? Will she arrange that?

[Kelly Tolhurst]

If I might correct the hon. Gentleman, they are not closures; they are franchises. I am concerned about the language used when we talk about the post office network. We are talking about a change in operation, not closures or a loss of service. I will happily meet the CWU on any issues it wants to raise. However, I have to be clear that these are not closures; they are franchises. I think that that sends a really strong message, because communities will think that they are losing all their post office services, when that is factually not the case.

I am aware that hon. Members have expressed concerns about this process. I have met many hon. Members to discuss issues that they have had with franchising in their constituency, and have raised those directly with Post Office Ltd. Citizens Advice reports that Post Office consultation is increasingly effective, with improvements agreed and reassurances provided in most cases. That demonstrates that the Post Office is listening to communities. Ultimately, decisions on franchising are commercial ones for the Post Office to take—within the parameters set by the Government to ensure that we protect our valued network.

On the partnership between WHSmith and Post Office Ltd, WHSmith sees post offices as a central hub in the community and takes the social responsibilities that come with that very seriously. As I have outlined, WHSmith has successfully operated post offices within its stores since 2006, and following the recent agreement, the number of post offices run in WHSmith stores will be greater than 200. This will support the long-term sustainability of post office branches and bring longer opening hours, so that customers are offered seven days of trading a week in convenient locations. Throughout this period, WH Smith has shown that it can successfully run post office branches across the country by delivering excellent standards of customer service, with trained staff promoting products and services in a modern retail environment.

Hon. Members have levied accusations about the fitness of WHSmith and its operation, but it is still very much a recognised brand on the high street, as is the Post Office. We need to accept that some consumers and customers are still very much lovers of the WHSmith brand. I have visited WHSmith branches in which there have been franchises, and the feedback from the community has been very good. I have seen at first hand how it can work. However, each store operates independently. Again, if there are issues with branches in any Member’s constituency, we will always raise those directly with the Post Office.

The Post Office card account is a commercial matter for the Department for Work and Pensions and Post Office Ltd. However, it is no secret that the contract for the Post Office card account comes to an end on 30 November 2021. For claimants who are unable to open a mainstream account ahead of that date, DWP will implement an alternative payment service that allows users to obtain cash payments, wherever their location, before the end of the contract.

It is worth pointing out that that 99% of a bank’s personal customers are able to withdraw cash, deposit cash and cheques and make balance enquiries at a post office counter. Post offices will therefore remain central to delivering cash to customers, including the elderly or the most vulnerable, regardless of the banking product that they chose or move to.

The hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss) rightly said that it would not be appropriate for us to talk about the legal proceedings at this time. However, I assure her that as the Minister responsible, I will endeavour to take any action required. I am absolutely committed to doing whatever is in my power to make sure that the Post Office retains its standing, and that the relationships it maintains are the best that they can possibly be.

[Hugh Gaffney]

The Minister says that standards will be maintained. Franchises do not maintain the same standard of services as Crown post offices. That is the point I am trying to make.

[Kelly Tolhurst]

I respect the hon. Gentleman’s position, but I disagree that moving to a franchise equals a loss of services and standards. I do not believe that, and I have not seen that, so I respectfully disagree. However, I absolutely take his point and understand his concerns.

Decisions on bank branch closures are a commercial matter for banks and are taken by the management team of each bank, without intervention from the Government. So that hon. Members can see exactly how well I understand the problem, I highlight that I represent Rochester and Strood, and Rochester no longer has a bank in what was the city. However, the Government recognise that branch closures can be disappointing for customers and believe that the impact on communities must be understood, considered and mitigated where possible. That is why we support the Post Office’s banking framework agreement, which enables 99% of the UK’s personal banking customers and 95% of the UK’s small and medium-sized enterprise banking customers to carry out day-to-day banking in the post office network.

I reassure the House that all post offices across the network are of the utmost importance to the Government. We recognise their value and importance to communities, residents, business and tourism in rural and urban parts of the UK. We also recognise and respect our sub-postmasters and the people who work within franchises, who work so hard, as was outlined throughout the debate; some postmasters will go the extra mile. We respect them, and we are determined to work with our partners to make sure that we maintain the Post Office as a viable business proposition for any postmaster to continue with. We will continue to honour our manifesto commitments, so that post offices thrive and remain at the heart of our rural and urban communities.

I again thank hon. Members for their contributions to the debate. I understand their frustrations, and I take their issues on board. In closing, I remind colleagues that, as I have said several times, I am always willing to talk to any MP regarding any constituency branch issue.

15:59

[Marion Fellows]

It is a pleasure to see you in the Chamber and to serve under your chairmanship, Mr Davies. Unfortunately, you missed the beginning of the debate, and I have to say that the Minister’s summing-up did not bear a lot of resemblance to what was actually said throughout. However, I am delighted that she agrees with us that the post office network is a vital national asset. It was a commitment in the Tory manifesto of 2017 to safeguard the network, but the tales that we heard from across the Chamber today are strong evidence that the network is not being safeguarded.

However, I am also very pleased that the Minister has reiterated that managed decline is not her objective. It is no one’s objective, but there is real concern and fear in our communities. Almost weekly now, we as Members of the House of Commons receive representations from postmasters about their absolute desire to work harder and to work well within their communities, but about how they cannot afford to do that at present. They are making less money per hour than the national minimum wage. Some are handling huge sums of cash, and they cannot make a living—that must not be allowed.

I do not think it is right that the Minister should hide behind the commercial independence of Post Office Ltd. It is really important to everyone in this Chamber and in our communities that the post office network be sustainable and move forward. During my speech, I asked 15 questions of the Minister. I asked for reviews; I asked for various things. I have not heard a single answer to any of the questions that I asked, but for the sake of brevity, I shall pick up now on only two of my questions.

As the Minister mentioned, Citizens Advice will continue to track services provided by the post office network, but what will she actually do when it reports back and says that things are not working? I have not heard an answer to that.

On outreach post offices in rural communities, a matter raised by various Members, I ask the Minister this: what happens after 2021, when the payments to those post offices cease?

I am sorry: I cannot count, because I have one more issue to raise. Post offices were to be the front office of Government. I ask the Minister to speak about that to Ministers in other Departments, such as the Home Office. The contract for biometric services has not been renewed by the Home Office, and that is putting more post offices at risk.

Hon. Members from across the Chamber intervened on the Minister. I chose not to do so, but I really hope that she will take on board my questions and provide answers that I can share with the Members who were here today.

Question put and agreed to.

Resolved,

That this House has considered the sustainability of the Post Office network.

16:01

Sitting adjourned.