Post Office Closures

(Limited Text - Ministerial Extracts only)

Tuesday 19th October 2021 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on having secured today’s debate, and on all the work that she and other Members do in the APPG on post offices. It is a very vibrant and diverse APPG, and I always enjoy speaking with its members and sharing thoughts with them.

I thank you, Mr Betts, and others for the tributes that have been paid to our friend and colleague Sir David Amess. In giving my tribute, I want to respond to the hon. Member for Strangford (Jim Shannon), who talked about the Government’s social vision for the Post Office, because two of the three things in our vision really chime with what Sir David did and what he stood for. The main building blocks are to deliver a convenient and trusted local service offer that meets customers’ needs—working closely with postmasters, who play a hugely important role in their communities—and to ensure that the Post Office’s services continue to be easily accessible to all consumers, particularly the vulnerable groups that need them most. The third, which perhaps does not relate directly to Sir David but is so important for the Post Office, is to support the Government’s access to cash and financial inclusion agenda by ensuring that basic cash and banking services are available throughout the network to meet the needs of individual customers and small and medium enterprises. We have heard about the importance of those services throughout the debate.

The post office network is unique. With more than 11,500 branches, the Post Office is the biggest retail network in the UK: there are more post offices than bank branches and building societies combined. Thanks to Government funding, we have ensured that we have the most stable post office network in a generation, with 99% of the population living within three miles of their nearest branch. As I go through my speech, I will try to cover some of the issues that have been raised about the network, but over the past decade, while the country’s high streets have undergone a significant period of change, the number of post office branches has remained broadly stable. As we have been discussing, that business has continued, and must continue, to evolve to meet customer need. What has not changed, though, is how undeniably important post offices are to communities. Our local post offices have never been more important or more valued than in the past 19 months, as the country has faced the unprecedented challenges of responding to the pandemic.

[Jamie Stone]

Does the Minister accept that his point about 99% of the population living within three miles of their nearest branch does not apply to my constituency?

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[Paul Scully]

I think the hon. Gentleman has a fair point. As I will try to develop a little, we need to do more to diversify and change the network to make sure it evolves, not only to use those mileage figures, but to make sure it meets demand and what is required by communities.

We wasted no time in March 2020 in announcing that post offices were an essential business and postmasters were key workers, so that post offices could stay open and provide the lifeline for businesses and customers everywhere that we have already heard about, and to enable loved ones to keep in touch at such a difficult time. Post offices have changed, because there is no Post Office without postmasters. While high streets grew quiet through the pandemic, postmasters across the UK went the extra mile to support their communities.

I was delighted to see Sara Barlow, the postmaster for Rainhill branch, and Luke Francis, postmaster for Bude branch, recognised in the recent Queen’s birthday honours for their services to local communities. Thanks to the tireless efforts of postmasters and their staff, those vital post office services continue to be available to communities across the country—an incredible 90% of the network remained open. I think there are many Saras and Lukes across the country who deserve our recognition.

However, the network was not immune to the challenges of the pandemic and branch numbers were clearly impacted. Some postmasters had to close their branches for health reasons, but other post offices were closed because of their location—for example, if they were in a university, community centre or library. The Post Office worked hard on a case by case basis to resolve any practical issues to keep as many post offices open as possible, but obviously it was not always possible.

I discussed the issues affecting the network on a regular basis with the Post Office’s chief executive, Nick Read, throughout the difficult time. His priority and that of the Post Office was, rightly, to protect vulnerable customers. The Post Office acted quickly to designate 1,000 branches as priority branches based on socio-economic criteria. These were branches that the Post Office considered would have the most detrimental impact on vulnerable customers should they close. That ensured that the Post Office’s efforts through the pandemic could be targeted. When any of those branches were forced to closed, the Post Office could implement a range of mitigations, including deploying mobile vans, the “post office in a box” kit and even redeploying trained staff from Post Office HQ itself. The Post Office also worked closely with Government to set up two cash delivery services, designed for self-isolating or shielding customers.

We have been monitoring the network situation very closely and working with the Post Office to understand further the impacts on postmasters and how we can support them throughout that period. Post offices were eligible to be awarded financial support through many of the Government’s measures to support business and were able to access other business support schemes, such as the VAT deferrals.

We also stepped in to put in place a temporary waiver for the requirement for the Post Office to provide those 11,500 branches. It was clear that despite postmasters and the Post Office doing everything they can to ensure services were available through the pandemic, it still was not possible to provide full network coverage. However, I am pleased to report that the waiver expired in June this year and that the post office network is above 11,500 again and with increased stability.

The pandemic helped to demonstrate what an incredible contribution post offices make to our communities. This confirmed, as we have heard, what we all know to be true. Many of us see first hand the impact that post offices have on our communities and how much constituents value their post office. That is widely backed by research, not just our own eyes and ears. The Association of Convenience Stores consistently finds that post offices are valued by customers and have a positive impact on the local area.

I fully appreciate and recognise the impact a post office closure can have on a community. I know it can be disruptive, particularly for those rural communities that do not have nearby alternatives, as we have heard. I can reassure hon. Members that we are confident that the post office network is stable and that the Government continue to be as fully committed as ever to ensure the long-term sustainability of the network.

However, it is inevitable that, with a network the size of the post office network, there will be variations, as we have heard, in the number of branches open at any one time. The post office network can and does fluctuate and change over that time, as postmasters move on, branches close, and new ones open. The Government’s access criteria ensure that however the network changes, services remain within local reach of all citizens. Churn in the network is part of the modern, dynamic, franchising business that the Post Office is.

A postmaster can resign for a number of reasons. They might be retiring, and the new business owner does not want to take on that post office. The postmaster might want to turn their shop back into a home. With partners who operate multiple post offices, businesses might make a commercial decision to resign from operating a post office. The reasons behind the post office closing might be varied, but I assure hon. Members that the Post Office’s response is tried and tested and it works. It requires operators to provide six months’ notice of a branch closure to allow it time to identify alternative ways to provide services.

We have talked about specific examples. That requirement applies to all franchising partners, whether it is a multiple retailer or an individual postmaster. Where notice is given, Post Office works hard with communities to make sure that the service is maintained. When it is not possible to open a full-time branch due to lack of retail premises in the local area, maintaining the service can include innovative solutions, such as mobile or outreach services. It is important that we make sure that those are temporary and that we look to more permanent, long-term solutions.

[Andy Slaughter]

I am listening very carefully to what the Minister says, but how does he explain the circumstances that I set out? I have just totted up in my head—I have half the number of branches open that the Post Office thinks should be open. I have six open, five temporarily closed and one that was due to open two years ago that never has. That is a system that is not working. I am sure I cannot be the only MP in this situation. How does he address the problem of temporary closures?

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[Paul Scully]

Temporary closures do not feature in the network figures. The 11,500 does not include temporary closures—trading has to have taken place within that month to be included in those figures. I understand the hon. Gentleman’s position. This is part of the churn that I am talking about. He and I both represent city seats, where branches tend to be closer together and can be more easily lost compared with rural communities, where there is a massive, immediate hit that everybody notices. Whether it is in Hammersmith or Sutton, there is probably more fluidity and churn, but the services are no less important for the most vulnerable in our society and we need to work through that.

We are not blind to future challenge. The hon. Member for Motherwell and Wishaw and others have talked about the Horizon scandal. It is a scandal. The vast majority of comments today have been about the future of the network. We cannot fully address the future of the network without addressing the past. I am really pleased to be back in my place after the recent reshuffle because it gives me the opportunity to continue the work to make sure that everybody affected by the Horizon scandal gets justice and gets fully compensated, and that we can work towards that. It will take time. It will not happen as quickly as those who are badly affected will want, but I will make sure I redouble my efforts on this issue, through the statutory inquiry and our considerations around it.

Turning back to the future, the retail sector has clearly gone through a significant period of change, which covid has accelerated. Post Office is continuing to explore new business opportunities to ensure a thriving national network for the benefit of communities, businesses and postmasters up and down the country. As the e-commerce market continues to grow, accelerated by covid-19, it is expanding its pick-up and drop-off offering. In the last few months, it has signed click-and-collect deals with DPD and Amazon. A new partnership has been forged with Yoti, a global leader in digital identity services—that is a clear demonstration of the Post Office embracing new technologies. Alongside those new partners, it is strengthening existing relationships. A landmark deal with Royal Mail was agreed at the end of last year to solidify what has been a long and successful relationship.

Finally, Post Office continues to work to secure the third iteration of the banking framework agreement, a vital partnership with all of the main UK banks and building societies to provide free-to-use cash services for those that need them right across the UK. The hon. Member for Newcastle upon Tyne Central (Chi Onwurah) talked about the record amount of cash withdrawn from post offices in August. That is an opportunity for the Post Office, as it has more branches than banks and building societies put together. No bank wants to be the last bank in town—they want to be the second-last bank in town—because the pressure and the spotlight are put on them. Only too often, the post office is there to work through. The Post Office is continuing to innovate through its bank hub trials, which are shared retail spaces where high-street banks can hold appointments with their customers on specific days of the week, in addition to the usual post office banking services available either at the counter or in the new self-service machines.

The hon. Member for Motherwell and Wishaw talked about Government contracts and about POca. It is for the Department for Work and Pensions specifically to work out who the contract is with. I speak to my colleagues there on a regular basis and I am due to speak to them and, indeed, to the chief executive about that. Yes, we look at what we can do for the Post Office, but clearly, we need to make sure that contracts are tendered on a commercial basis and deliver value for money, alongside that social purpose, through whoever provides the service.

A number of Members raised CJ Lang’s commercial decision to resign from operating 31 post offices. As with all post office closures, we regret the commercial decision and recognise the disruption that will cause to affected communities. I speak with the Post Office regularly about that because I know how concerning it is for our Scottish colleagues across the House and the communities they represent. The Post Office continues to make significant progress in finding the solutions to mitigate that customer impact and I understand that it is in discussions with both independent postmasters and various retail groups. The Government will continue to monitor the situation closely to ensure the access criteria continue to be met in the affected areas.

Similarly, my hon. Friend the Member for Keighley (Robbie Moore) talked about Haworth, and I will certainly take that away. I know that the petition he has raised has been heard. I assure those Members who are wondering whether the Post Office is listening that I will have a message for it about the debate when I get back. It is listening and will respond, but I will take that away and make sure my hon. Friend’s work standing up for his constituents is heard.

I thank hon. Members for their contributions to the debate. I cannot do justice to all the things they have raised, or I will be here way beyond time. To make one last point about postmasters’ remuneration, again, that is an operational matter for the Post Office, but we have to recognise the importance of supporting postmasters to give them the future we talked about. I was pleased to see that it listened carefully to the feedback it received on the proposed changes, and I welcome the recent improvements it announced last month. We will continue to monitor and work with the all-party parliamentary group and the Post Office to make sure postmasters feel they have that vibrant future. I thank hon. Members once again for their contributions. It is encouraging to see everybody come together to ensure that a vital national asset continues to serve our constituencies for many years to come.