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The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)
It is a pleasure, Mr Hosie, to speak with you in the Chair. I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing this important debate on a subject close to my heart, as a rural MP.
The post office network plays a unique and vital role as part of the UK postal system. Although consumers have more choice than ever when it comes to purchasing postal products, many still turn to bricks-and-mortar post offices. As the hon. Member rightly said, post offices are part of the social fabric of our communities.
There are currently over 6,000 rural branches, which constitute 54% of the total post office network. Over 3,000 of those rural branches are described as the last shop in the village. Recent research highlights how vital these branches are. They enable people to access vital services without needing to drive or use public transport. They are particularly cherished by older people and those who might struggle to travel far to access services. In my constituency we have lots of bus passes but not many buses, so it is very important that those rural post offices exist, as they are also integral to businesses operating in rural areas because of their important role in providing access to cash.
Cash being the word, the Government have provided significant financial support to sustain the network nationally, adding up to more than £2.5 billion over the last 10 years. The Government are providing a further £335 million for the Post Office for the period between 2022 and 2025. As part of that support, the Government have committed to maintaining the annual £50 million subsidy to safeguard services in the uncommercial parts of the network until 2025.
The Government protect the sustainability of the branch network, and the rural network in particular, by providing funding on the basis that the Post Office meets its minimum access criteria, to ensure that across the country 99% of the population live within 3 miles of their nearest post office, as the hon. Member referred to. The Post Office meets its access criteria obligations nationally, making it the largest retail network in the UK with an unrivalled reach, especially in rural areas. Indeed, in 2022 98% of the rural population lived within 3 miles of their nearest branch.
The Government remain committed to the long-term sustainability of the Post Office, but we have to recognise that there is not a bottomless pit of money. Of course, with a network of this size, we are likely to see a fluctuation in the number of branches that are open at any one time. However, the network is certainly not in decline at a national level. As its chief executive officer recently confirmed, the network is as large today as it has been for five years, with around 11,700 branches open.
Marion Fellows
The count of the number of post offices includes drop and go facilities. Those are not in any sense post offices, as all Members here would recognise them. Does the Minister think that is fair?
Kevin Hollinrake
Drop and go branches perform an important service, as do mobile post offices, of course. However, there is no doubt that there are challenges in maintaining the size of the network, which I will come to shortly. Of course this is public money that we are spending, so we must ensure that it is spent well, while being appropriate to the need locally, particularly in rural areas.
The percentage of the network serving rural communities has remained steady at 53% since 2016. We appreciate that it is very challenging for communities that lose their post office service and the Post Office endeavours to restore services as quickly as possible.
Tim Farron
The Minister is a good man; I am very grateful to him for being so generous, indeed super-generous, to my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) earlier.
The thing about individual post offices is that I can think of a couple of villages in Westmorland and Furness —Hawkshead and Shap—that have lost their post office and where Post Office Ltd. is working hard to restore them. Will he pay particular attention to those communities to make sure that we get those replacements over the line, because we are all but done with getting them back on the street and back open?
Kevin Hollinrake
We are very happy to take up any particular issue that Members raise, as we do regularly through correspondence and other measures. Where there are closures of post offices, we will endeavour to reopen them, but that can be challenging. However, if there is a particular issue, I am very happy to meet the hon. Gentleman to discuss it.
Patricia Gibson
Does the Minister think there is a case for giving greater UK Government support to rural post offices, which, by definition, cannot compete on footfall because they serve smaller populations, so that our island and rural communities can keep hold of our post offices, even during these difficult times?
Kevin Hollinrake
As I said earlier, I am bound to stand up for rural areas, just like the hon. Lady and others in this debate, but there is a limit to taxpayers’ money, and we are talking about £2.5 billion over 10 years and significant funding requirements now, in terms of the needs of both the network and the compensation schemes, which I will refer to in a second. We do not have a bottomless pit of money. However, there are other measures we can take, which I will mention, to make the Post Office sustainable and make individual branches profitable, which is the key to this conversation.
Returning to specific branches, I am glad that the hon. Member for Caithness, Sutherland and Easter Ross referenced the Balintore post office, which reopened at the Seaboard Memorial Hall last year, thanks to the efforts of the post office and the hall’s committee, and indeed Maureen, the postmaster. However, we are in no way trying to pretend that the rural network is not facing challenges—not at all. As I have said before, the Post Office works with communities to ensure that services are maintained, and the Government’s access criteria ensure that however the network changes, services remain within local reach of all citizens.
My hon. Friend the Member for Havant (Alan Mak) rightly references post boxes, which are another key part of this matter. Royal Mail is there to ensure that there is a post box within half a mile of the premises of at least 98% of users of postal services. If that is not the case, I am very happy to engage with my hon. Friend to get answers for him and change in his local area.
My hon. Friend the Member for Penrith and The Border (Dr Hudson) challenges the Government on what more we can do to ensure the sustainability of post offices. It is important we take into account that many of the challenges facing post offices are because of the changes in consumer habits—just like the rest of the high street, which is seeing those changes too. That is also related to Government services such as driving licences, passports and other similar services, mentioned by the hon. Member for Motherwell and Wishaw (Marion Fellows), who does a fantastic job as chair of the all-party parliamentary group on post offices. Many consumers now want to access such services online, which can be done very efficiently. I do not think it is for us to dictate to those citizens how they access those kinds of services if they can do so more quickly and efficiently online. That would be the wrong thing to do.
Marion Fellows
The Government will be dictating to our constituents how they access those services if they are withdrawn from post offices, because digitally excluded people will not be able to use them online.
Kevin Hollinrake
If that was what the Government were doing, that would be something the hon. Lady could hold us to account for, but that is not the case. There is a clear negotiation between different Government Departments over the cost of providing those services, with negotiations between the passport service, the DVLA and the post office network itself. I very much hope there is a good commercial relationship that properly remunerates postmasters for the work they do, which is key.
As I say, there has been a diminution of hundreds of millions of pounds in revenue into the post office network because of the change in consumer habits, so we need to find ways to make the network sustainable in its own right. We do not have a bottomless pit of money. We are talking about £2.5 billion over 10 years. This year, the UK economy deficit in terms of public spending, expenditure and income will be about £140 billion.
The hon. Member for Selby and Ainsty (Keir Mather), whom I welcome—this is the first time I have responded to him in a debate—challenges us to do more and provide more funding. There are challenges with that. To govern is to choose, so we have to be careful how we spend taxpayers’ money. Nevertheless, we want to make sure that the post office network is sustainable in its own right, wherever possible, to ease the burden on the taxpayer. We are, of course, determined to retain the network wherever possible and to find ways to do that.
The hon. Member for Westmorland and Lonsdale (Tim Farron) rightly raises the issue of the banking framework. This is a relationship between banks and post offices, in terms of how post offices are renumerated for providing many of the services banks used to provide when they had branch networks across the country. Since 2015, there have been 5,500 bank closures—at the last count—across the network and collectively across the different high street brands. That saves those banks somewhere in the region of £2.5 billion to £3 billion a year.
We are very keen for the Post Office, in its negotiations with the banks via UK Finance or other means of negotiation, to get a better deal and better remuneration from that relationship. Increases in remuneration should go, wherever possible, into the branch network or into automation to make those branches work more efficiently, so that they can be more profitable. A key thing that we would like to see is a fairer relationship, which shares some of the savings banks are making from the closing of their branches with the network that is providing those services since their closure. While we want to see access to post office services retained for our communities, we also want things like access to cash, both in terms of dispensing cash and cash deposits. That is vital, particularly for small and medium-sized enterprises, and for the 2 million people in this country that do not have a bank account and the 8 million people who use cash every single week.
Jamie Stone
At the beginning of my contribution, I outlined the success story that is the work of Councillor Maureen Ross to establish a post office in Balintore. I know from having talked to the good lady that she is thinking of increasing the opening hours and has thoughts on banking, as we have no bank branches in the villages at all. I suggest to the Minister that it might be constructive if perhaps some officials from his Department went up there and talked to Councillor Ross, and saw what a good idea that would be.
Kevin Hollinrake
I would be very happy to visit if I find myself in that part of the world. It is quite a way away from even my constituency, but Maureen obviously does a fantastic job for the hon. Gentleman and his community, and we are keen to support those efforts. I am very happy to facilitate a conversation to ensure that Maureen has the best opportunity to make her business as viable as possible.
The Government are also funding the cost of the replacement of the Horizon IT platform that caused so many difficulties. Again, we hope that will provide new opportunities too, both in terms of efficiency and new services. We see post offices becoming parcel hubs, and the Post Office sees that as an opportunity to be frequented not just by custom from Royal Mail but also DHL, DPD, Amazon and other providers. There are future revenue opportunities that we should encourage to ensure that the network is sustainable.
Briefly on Horizon, last week’s written ministerial statement announced our intention to provide additional financial support to the Post Office as it continues to respond to the Horizon IT scandal. That is further proof of our commitment to the network.
There are certainly challenges ahead, but we continue to work with the Post Office to ensure that it is fit for the future, and we always welcome views from across the House on the network and how we make it sustainable for the future. I therefore once again thank the hon. Member for Caithness, Sutherland and Easter Ross for securing today’s important debate, and thank all other Members for their contributions.
Question put and agreed to.