Post Office Network

Tuesday 4th June 2019 Written Statements

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

I wish to provide an update to hon. Members on the steps that the Government are taking to ensure the long-term sustainability and resilience of the post office network.

The Government set the strategic direction for Post Office Limited, to maintain a national network accessible to all and to do so on a sustainable financial basis and allow the company the commercial freedom to deliver this strategy as an independent business.

We recognise the Post Office’s distinct social purpose and the important role post offices play in communities across the country, which is why our 2017 manifesto committed to safeguard the network, protect existing rural services and work with the Post Office to extend the availability of business and banking services to families and small businesses in rural areas.

Between 1997 and 2010 the post office network reduced in size by 37%, resulting in the loss of over 7,000 post offices. Since 2010 we have invested over £2 billion in the network. This funding sought to increase the viability of the network by making it more accessible, modern and tailored to customers’ needs while reducing the long-term burden on the taxpayer.

The Government have no programme of post office closures. Post Office Limited has opened over 400 branches since April 2017 and the Government are committed to ensuring the long-term sustainability and resilience of the network. We not only place a contractual commitment on Post Office Limited to maintain a network of 11,500 branches, but also stipulate stringent access criteria to ensure that this large network is accessible to citizens across the country. More than 93% of the UK population live within one mile of their nearest branch, with more than 99% within three miles.

There are now over 11,500 branches and the post office network is at its most stable since 2013, having changed in size by under 1% over this period. This overall change accommodates a level of churn in what is an extremely diverse network, as branches close and are replaced, and Post Office Limited is therefore used to working quickly with local stakeholders to provide replacement services.

Government subsidy ensures that branches serving our rural communities that need additional support receive it so that they can stay open. In order to provide value for money for the taxpayer the subsidy to the post office has reduced. This fact reflects the progress that the business has made: returning to profit after 16 years of losses, providing a stable network and reducing its reliance on the taxpayer.

Beyond 2021, Government remain committed to ensuring the long-term sustainability of the network and will work with Post Office Limited to achieve this.

It is crucial that running a post office is attractive and sustainable for postmasters, and they should be fairly remunerated for the services they provide. Post Office Limited’s successful renegotiation of the banking framework with 28 high street banks, announced on 15 April, secured a significant increase in the overall fees they receive from the banks. As a result of this, they will double and, in some case, treble the rate that agents receive for processing deposits from October 2019. For example, in a main post office branch, postmasters will receive £8.16 for processing a £8,000 cash deposit, compared with the £3.12 they currently receive.

98% of the post office network is franchised and postmasters are vital to the delivery of the network. The remuneration for delivering post office services should be combined with a successful retail offer in order for postmasters to thrive in today’s competitive retail environment.

The Government have rightly moved with the times as many of us now prefer to access services online. Whilst this has an impact on the Post Office, we cannot ignore people’s desire to transact with Government digitally from the convenience of their own homes. However, we are also committed to ensuring that its services are accessible to all citizens and the post office network does and will continue to play a key role in this.

We are committed to working with Post Office Limited and our postmasters to develop the business and offer, in order to maintain the delivery of services that our constituents want and need, so that the Post Office remains at the heart of communities across the country.

[HCWS1592]