Baroness Wilcox
Main Page: Baroness Wilcox (Conservative - Life peer)Postal Services Bill
Baroness Wilcox Excerpts
The Archbishop of York
My Lords, under Amendment 21A, one of the greatest regrets about the manufacturing base of this country is that companies in the public interest were disposed of without the kind of assurance that is being asked for here. If we look at steel, coal-mining and our car manufacturing bases, public interest in those companies was disposed of in the hope that the people who took them on would make them more viable, but when they took them over they explained that these businesses were not viable. Before we knew where we were our car manufacturing base and our steel industry were not about any more.
It worries me that if you get rid of any public interest—in the case of the Post Office, it is the Crown’s interest—before you are quite certain that whatever company is created will be viable at least through some financial times, you will be in real difficulty. It would be very easy for whoever takes these organisations on to say “By the way, when we looked at the books, they were not what we thought they were”. Then someone else buys it and takes it on, and before you know where you are the Royal Mail and those other places are not about.
Although it is difficult to put it in the Bill, the assurance that this amendment seeks is absolutely necessary. As long as there still is Crown interest in the Post Office, there is a chance that we may do it properly. As soon as that goes—before there is the assurance sought in this amendment—I am afraid that we may end up with what happened to British Steel, coal-mining and the car industry.
Baroness Wilcox
My Lords, here we are on day three eventually at the issue of the Post Office and all the concerns that have been expressed today. The noble Lord, Lord Whitty, raised a number on the future of the post office network, as did the noble Lord, Lord Cameron, the noble Baroness, Lady Howe, and the most reverend Primate. These will be covered by a number of amendments that follow and I ask noble Lords if I may respond to those points in those debates.
On the future relationship between the Royal Mail and the Post Office, I hope that my commitment to the noble Lord on Monday to consider his amendment to include information on that relationship in the Clause 2 report provides him with some comfort. This group of amendments relates to the circumstances in which the Secretary of State can transfer his interest in the Post Office to a relevant mutual and the information which should be furnished to Parliament in connection with that transfer. This Government believe that mutualisation of the Post Office could be ideally suited to the particular economic and social role it plays up and down the country. We understand that sub-postmasters, sub-postmistresses and other stakeholders would highly value the opportunity to have more of a say in how this well loved institution is run.
We envisage that a mutual Post Office Ltd could allow communities to tailor services to their needs and give those who know the Post Office best a greater stake in the future of the institution that they value so dearly. Indeed, the many community-run post offices across the country demonstrate that this can work. Clause 7, which we will discuss in due course, ensures that any mutual must act for the public benefit. No Post Office mutual will exist solely for the financial benefit of its members.
Clauses 4 and 7 work together to set clear parameters within which a transfer to mutual ownership could be made, but they do not oblige such a transfer to be made. That is because developing the appropriate model for a mutual Post Office must not come from the top down.
Amendments 21A and 22ZD seek to ensure that Post Office Ltd is on a secure financial footing before any move to a mutual model may be made. The network must of course be on a secure financial footing before any move to a mutual model is made. Indeed, it would not be in the interest of any Post Office Ltd stakeholders to take on the running of a company that was not in a suitable position to sustain itself. Nor indeed would the Government consider handing over control of the Post Office if they were not satisfied that the company could flourish in the absence of the levels of subsidy that are currently provided.
The £1.34 billion in funding that we are providing to the network over the next few years will do more than just guarantee that at least 11,500 post offices will remain working. It will ensure that the network can be modernised, offer an improved customer experience and so be in a better position to compete for new business. We believe that the Post Office could be in a financial position that would allow for the possibility of mutualisation by the end of this Parliament. I hope that goes some way to answering the question put by the noble Baroness, Lady Donaghy. This funding will ensure that the Post Office services across the United Kingdom on which so many people rely, particularly the most vulnerable in our communities, are protected exactly as the noble Lord, Lord Cameron, so eloquently explained is needed.
Whether or not this move to a mutual structure happens, we envisage that the Government would still need to provide a small amount of subsidy to ensure that offices remain open where they might not otherwise survive, such as in rural or deprived urban areas; yet Amendment 21A would not permit a mutual to operate in these circumstances.
However, it is important that there is transparency about improvement in the financial position of the Post Office, as, for example, the noble Lord, Lord Whitty, seeks under his amendment. That is why this Bill introduces, at paragraph 17 of Schedule 12, a new requirement that the annual accounts of the Post Office be laid before Parliament every year.
We aspire to a vibrant and flourishing Post Office in the future, which does not simply rely on government handouts, but which can provide a wide range of services across a nationwide network. The markets in which the Post Office operates are highly competitive. It would not be in the interests of the Post Office, the future members of the mutual or the Government if the business plan being relied on to continue fostering that vibrant and flourishing Post Office were published, as envisaged by Amendment 22ZD.
I turn to Amendments 21C, 22ZA, 22ZB and 22ZC. These amendments all seek to require a further parliamentary approval process prior to any transfer of the Secretary of State’s interest in the Post Office to a relevant mutual. Amendments 21C and 22ZB do this as stand-alone amendments, while Amendments 22ZA and 22ZC combine to the same effect.
Clause 5 introduces an important means by which Parliament can hold the Secretary of State to account for a decision to move towards a mutual ownership model for the Post Office. However, we do not believe it would be appropriate for Parliament to have a veto right over any subsequent move to mutual ownership that is within the statutory parameters being debated today. The reason is that developing the appropriate model for a mutual Post Office must not come from the top down. I am grateful to the noble Lord, Lord Borrie, for his observations. He may be interested to know that, subject of course to the strict statutory parameters set out in Clause 7, the interests of all of the Post Office’s stakeholders—for example, sub-postmasters, staff, business partners and customers—must come first.
Co-operatives UK, the national trade body for co-operatives, is talking to those stakeholders and will shortly report to Ministers on some potential options for a mutually owned Post Office, and before any final decision is taken by the Secretary of State, there would of course also be a public consultation. But since, at the conclusion of that process, the ultimate decision to transfer the Post Office to a relevant mutual will rest with the Secretary of State, Parliament must be informed swiftly and in appropriate detail of the decision. Clause 5 sets out those requirements. It specifies the details that must be included in the report and also requires the Secretary of State to lay it before Parliament as soon as reasonably practicable after he has made the relevant direction or authorisation.
Baroness Wilcox
I thank the noble Lord, Lord Stevenson, for tabling this amendment. The Government are clear that the wide range of financial services that the Post Office offers—personal loans, credit cards and savings products, for example—are an important part of its total product suite. The Government made clear in the coalition agreement that we would look at the case for developing new sources of revenue for the Post Office, including the creation of a post office bank. We have looked at the different options and arguments for such a bank very carefully and have come to the conclusion that, particularly in the financial climate that we are experiencing, it is just not a viable option. My noble friend Lady Kramer spoke further on this and gave us her views, and I think that she felt the same.
Setting up and capitalising a new bank would be very expensive as well as creating a much more volatile and risky balance sheet for the company. Instead, we are committed to ensuring that the Post Office continues to offer wide access to existing banking facilities. For that reason, we were extremely pleased that in November last year the Royal Bank of Scotland reached agreement with the Post Office to allow RBS customers, including NatWest customers, access to their current and business accounts at the post office. That will mean that almost 80 per cent of all current account holders will be able to withdraw money free of charge at the post office, while many can also pay money in and check their balances.
In response to points raised by the noble Lord, Lord Stevenson, on financial inclusion, supported by the noble Baroness, Lady Turner, the Post Office already offers a range of services to help people on lower incomes, including the Post Office card account and the ability to access all basic bank accounts.
The noble Lord, Lord Clarke of Hampstead, will be heartened to know that we are extremely supportive of a stronger link-up between the Post Office and credit unions. Recent announcements by the Department of Work and Pensions on credit union funding open up excellent opportunities for the Post Office to provide access to credit union services to many more people. This builds on existing co-operation between the two sectors, which is already strong. Maintaining the large branch network and increasing access to bank accounts at the post office, as I have said, is an important step towards financial inclusion.
Financial services are clearly an area with significant potential for growth. As I have said, though, the creation of a post bank would not be in the best interests of the post office network. Instead, we strongly believe that funding for the Post Office will be best spent modernising and maintaining the network. The funding that we have provided to the network will mean that the Post Office is better placed to compete for new business.
Lord Lea of Crondall
I may have misheard the Minister, but did I hear her say that all these desirable things are dependent on the maintenance of a wide network? Is it part of the Government’s guarantee that that wide network will be there?
Baroness Wilcox
Yes, that wide network will be there.
We strongly believe that funding for the Post Office will be best spent modernising and maintaining the network. The funding that we have provided to the network will mean that the Post Office is better placed to compete for new business and to further develop its offer to both local and national government, in its ambition to become a front office for the Government. As part of this strategy, we will of course also support the Post Office in expanding its financial services offering, but at this time we believe that that is best done by offering access to the existing high street banks through the post office network.
The noble Lord, Lord Stevenson, asked a number of further questions on credit unions. It would be best for me to deal with those concerns when we discuss credit unions specifically in the later amendment under Clause 11. I hope that it is possible at the moment for the noble Lord to withdraw his amendment.
Lord Stevenson of Balmacara
I thank the Minister for her reply. I suspect that I made a mistake in trying to bring a touch of levity to the debate by quoting “Blackadder”—it was picked up by only a couple of people, one of whom used it to beat me over the head with. I suppose that that is the risk of quoting Blackadder, who seemed to have a singularly unsuccessful way of making his plans come to fruition. I should probably never use that again, so I will not.
We are delighted that the Minister has confirmed that she has looked so hard at the question of a post bank—given the coalition agreement, it would have been rather hard not to do so. I am surprised, given the way that the coalition agreement seems to permeate so much of the business in this House, that my proposal has not been given more of a favourable wind, but there we are. It got a lot of support in the speeches that my noble friends and others on both sides of the House made, and I still think that it is a good idea.
My amendment was an attempt to express the frustration that came out in the intervention that the Minister took. In some senses, we seem to be underplaying the capacity of the existing network to do so much more for society. These post office branches exist. In most cases they are active, vibrant places. People use them—I quoted the figures in my address. We need a complete rethink about the way in which the Government do business. We should take the post office network and use it to achieve more than it is currently capable of doing, given the single use that we are making of it.
How do we save our declining post offices? We use the brilliant brand. We use the securely established places that these post offices inhabit in wonderful locations, with huge footfall, in every part of our country. They are used and valued by people but we do not use them properly to achieve the further output of government. They are places that people go to for their services. People use them for transactions and pick up more information to learn—
Baroness Wilcox
If the noble Lord will bear with me, I must intervene. We do believe that there is an exciting future, so much so that we are supporting 11,500 post offices. The previous Government closed them, but we are not closing any.
Lord Stevenson of Balmacara
I am afraid that the Minister did not quite get my point; I was in the middle of a wonderful peroration which, had she heard it to the end, would have made it clear.
I am talking not about post offices qua post offices but about post offices as an engine for doing more for the whole of government. That is what I am trying to argue the case for. The post bank would therefore be one of a number of things that, if it were located in post offices, used and built on, would be able to sustain the network and perhaps to build back to the numbers that we want to see. However, given that this is not the time to make that sort of speech or to make these sorts of arrangements and that the amendment is framed very narrowly, I beg leave to withdraw the amendment.
Lord Young of Norwood Green
My Lords, I shall also speak to Amendment 21E. By nature these are somewhat technical probing amendments to see whether there is a loophole in the disposal of “any part”. That is the basis of those amendments. I am trying to set the world record for brevity in moving an amendment. I look forward to the Minister’s reply.
Baroness Wilcox
My Lords, Amendments 21D and 21E refer to the circumstances in which a relevant mutual could dispose of its interest in the Post Office. I understand that these are probing amendments.
Clause 4(4) makes clear that the only people who can own an interest in the Post Office are relevant mutuals, the Secretary of State, the Treasury, a nominee of either the Secretary of State or the Treasury or a company that is wholly owned by the Crown. The clarification envisaged by Amendment 21D is not required to achieve this.
Amendment 21E seeks to ensure that any disposal made by a relevant mutual would be a disposal of its entire interest in the Post Office. While in practice we would expect only one relevant mutual to own the Post Office at any one time, we believe this amendment to be unnecessarily restrictive. For example, there may be circumstances in which different stakeholder groups form separate corporate bodies, each taking an interest in the Post Office. Provided the Secretary of State was satisfied that each body met the conditions set by Clause 7, it would seem overly restrictive to rule out the possibility.
We will debate Clause 7 shortly, but I shall briefly summarise the strict safeguards that are put in place under it. The Secretary of State must be satisfied that the conditions in Clause 7(2) to 7(4) will continue to be met before there can be any transfer to a Post Office mutual. Those conditions ensure that the Post Office mutual must continue to act for the public benefit by promoting the use by the public of Post Office services, that its members have a clear interest in it so doing, and that disposals that might jeopardise that will be prevented.
I hope that I have sufficiently reassured the noble Lord, and I ask him to withdraw the amendment.
Lord Young of Norwood Green
My Lords, I thank the Minister for her reply. I will certainly reflect on those measured words. In those circumstances, I beg leave to withdraw the amendment.
Baroness Wilcox
My Lords, I thank the noble Lord, Lord Stevenson, for this amendment. The Government are very keen to see sub-postmasters, sub-postmistresses and staff of Post Office Ltd—the very people who know the network best—involved in the running of the business. That is why this Bill contains provisions that enable the mutualisation of Post Office Ltd.
We believe that mutualisation could help to ensure that sub-postmasters, sub-postmistresses, staff and communities could in the future all have a say in how the Post Office is run. Co-operatives UK is seeking the views of the Post Office’s major stakeholders and will soon report back to my department on proposals for a mutual Post Office. The work that Co-operatives UK is carrying out seeks to address questions such as who the members of a mutual might be and which stakeholders should play key roles in how the Post Office is run in the future. A mutual Post Office must be established with the best interests of the company, the sub-postmasters and sub-postmistresses and the wider public, who are its customers at heart. It must be allowed to develop organically, with the willingness and participation of its members. We believe that it simply would not work if government imposed a rigid top-down structure.
Indeed, it is by no means clear at this stage that the selection of sub-postmaster and sub-postmistress and employee representatives to the board by election would necessarily be the best option for the Post Office network. There is an obvious reason for this; the mutual has not been designed yet, so we cannot know its governance structure. Enshrining its governance in legislation now and then trying to develop the mutual within these requirements goes completely against our commitment to ensuring that the mutual is developed by the people who know it best.
The Government strongly believe that the Post Office and its key stakeholders should be allowed to form their own mutual governance structure as appropriate. In the light of this, and in view of the work that is being carried out on the mutualisation of the Post Office, I hope that the noble Lord will feel able to withdraw the amendment.
Lord Stevenson of Balmacara
I thank the Minister for her positive remarks. I am certainly interested in seeing Co-operatives UK’s report because that will obviously help us to progress this debate. I have little further to say. There are dangers in not specifying a little more what the Government really want out of mutualisation, but I accept that it is early days and that there is plenty of time for that. I beg leave to withdraw the amendment.
Baroness Wilcox
My Lords, these amendments seek to strengthen the current access criteria so that they match current post office network coverage, and to enshrine them in legislation, as well as to provide mechanisms to review these criteria. They also seek to specify the services which should be provided across the network and in which locations a full range of services is to be provided.
On Amendment 22A in the name of the noble Lord, Lord Whitty, the Government are committed to maintaining a nationwide post office network. The Post Office is required to provide a network of at least 11,500 branches. This is a legally binding commitment to a minimum number of post offices. The Government have made a commitment that there will be no programme of post office closures.
Post Office Ltd is also legally obliged to ensure that precisely the same access criteria introduced by the previous Government are maintained. The previous Government, of course, had the opportunity to put these criteria into legislation in their 2009 Postal Services Bill, but they did not see the need to do so. Indeed, during debate on the 2009 Bill, the noble Lord, Lord Tunnicliffe, observed that the access criteria were “very stringent”. By legally obliging the Post Office to maintain these criteria in return for the £1.34 billon of funding over the duration of the spending review period, this Government have introduced another safeguard to ensure that these stringent access criteria will still be met. In fact, Post Office Ltd continues to exceed these criteria. Last year’s report by Postcomm on the post office network, from which I believe the criteria in this amendment are derived, demonstrates this fact.
The amendment seeks to press the metaphorical pause button, to prevent any changes in the post office network from today’s position. However, this is unrealistic; 97 per cent of post offices are privately owned and operated, and there will always be changes in the network where, for example, sub-postmasters retire or move on to pastures new. It is not through regulation that we will save the post office network. To ensure that the Post Office has a vibrant future, it must be allowed to develop, to modernise and to evolve. It must focus on its customers, reaching out to new customers and winning back those who have drifted away. Major modernisation is needed in order to address the underlying economics of the network. That is what our £1.34 billion funding package will achieve.
The noble Lord, Lord Young, raised the issue of the new Post Office local model. I will come back to that in detail later this evening during the debate on Amendment 24EA in the name of the noble and gallant Lord, Lord Bramall, which will be moved by the noble Viscount, Lord Tenby.
The Post Office’s access criteria are the strongest that we know of in Europe, when you consider our safeguards for rural, urban and urban deprived areas. In Germany, for example, the requirement is for a post office every 80 square kilometres, whereas we mandate that 95 per cent of the rural population must be within three miles of the nearest post office. The £1.34 billion that we are providing will ensure that our network continues to thrive in the future.
Subsection (2) of the proposed new clause in the amendment of the noble Lord, Lord Whitty, seeks to ensure that certain services are provided across the network. Let me reassure the noble Lord that the Government are absolutely committed to maintaining the network, and supporting Post Office Ltd as it seeks to win new business from government and other sources. The Post Office is determined to become a front office for government, by developing and applying services in a number of ways. There is continued progress on this agenda. For example, the Department for Work and Pensions has recently announced plans for three new pilots, opportunities to support the universal credit reforms, and funding set aside for credit unions that will increase opportunities for the Post Office to deliver credit union services to many more people.
An important part of restructuring the network will be for the Post Office to ensure that services are tailored to meet the needs of its customers up and down the country. We cannot, and should not, expect the Post Office to provide all its 170 services at all branches across the entire network, as this amendment seeks to achieve. In smaller branches, for example, it makes far better commercial sense for sub-postmasters and sub-postmistresses to focus on the key services that most people need to use, most of the time. Of course, the services offered by the Post Office on behalf of local authorities may differ from area to area. Amendment 22C, in the names of the noble Lords, Lord Young, Lord Stevenson and Lord Tunnicliffe, does indeed take this fact into account. That amendment seeks a register of access criteria to be issued by the Secretary of State setting out the minimum location and geographical distribution of post offices which provide the full range of services provided by post offices.
Lord Young of Norwood Green
My Lords, as all noble Lords will be aware, post offices continue to provide a lifeline to residents in rural and urban deprived areas not only through access to postal services, but also as the shopfront for government services, as a means of benefit collection, and often as the only source of cash withdrawal in an area.
Amendment 22B aims to ensure that proper consultation procedures are followed when a post office closure is considered. It is not intended to prevent all post office closures; it simply aims to strengthen the opportunity for stakeholders to have input into the consultation process. It also provides for a longer consultation process for potential closures in rural and urban deprived areas. Rural and urban deprived areas clearly suffer disproportionately when a post office closes. Post offices have closed in vast numbers in recent years, both through formal closure programmes and through natural wastage when sub-postmasters close their businesses and post offices are not replaced.
Over the past 10 years, the post office network has declined from 17,845 in 2000-01 to 11,905 in 2009-10. This is, in large part, due to two major closure programmes, the Urban Network Reinvention programme from 2003 to 2005 and the Network Change programme from 2007 to 2009. Between them, these programmes resulted in the closure of 4,854 post offices. That means that more than 1,000 post offices have closed outside of those programmes as sub-postmasters leave, often because their post offices have ceased to be viable, and the Post Office is unable or unwilling to provide a replacement.
Approximately 11 per cent of the post office network is in urban-deprived areas. As Consumer Focus clearly states:
“Urban offices play an even more important role in urban deprived areas, particularly as they provide free access to cash, plus pensions and benefit payments”.
The 2003-04 Urban Network Reinvention programme was an attempt by Post Office Ltd to reduce the size of the network with a view to developing a more commercially viable network. It further hoped to manage the so far unplanned decline in network size that was arising from sub-postmasters' decisions to close their businesses. At the time of the programme, there were serious concerns over the fate of post offices in urban deprived areas. The Government stated that they would not close post offices in urban deprived areas unless there was another branch within half a mile or unless there were exceptional circumstances to justify the closure.
The Post Office was heavily criticised at the time due to its lack of adequate consultation. As the then Trade and Industry Committee concluded in its report on the programme:
“Post Office Ltd and Postwatch paid insufficient attention to the need to ensure that adequate consultation procedures were in place before the network reinvention programme began. Although improvements have subsequently been made, and while we understand that sub-postmasters could appreciate a speedy conclusion to consultations over the future of their branches, we think that it is vital that all stakeholders should be given the time and opportunity to present their views on closure proposals. A twelve week consultation period would have satisfied this requirement. It was inconsistent of the Government to allow a company of which it is the sole shareholder to ignore guidelines for consultation which it encourages other organisations to follow”.
Equally, the 2007-09 Network Change programme was an attempt to reduce the size of the network with a view to making it economically viable. Over an 18-month period, more than 2,500 post offices were closed and a further 500 were replaced by outreach services. Outreach services provide postal services to communities where a post office is not deemed to be viable. These are often in the form of a mobile post office, a van which visits communities at certain designated times each week and provides a core range of post office services. There are now 772 outreach services in the UK, making up 6 per cent of the post office network.
The Network Change programme was also heavily criticised due to the difficulty stakeholders had in influencing closure decisions. Research into the programme by Consumer Focus found that,
“consumers were not convinced by the UK Government’s reasons for the closure programme. Furthermore, they were very unhappy with the nature of area consultations on closures, as there was little scope to alter decisions and Post Office Ltd had not been seen to respond to concerns raised”.
The Post Office's code of practice for the Network Change programme closure consultations included a six-week consultation process. Many stakeholders felt that the consultation processes were inadequate. This was, in large part, because the criteria for closures and the decision to close 2,500 post offices had already been made prior to the consultation process. This meant that opportunities for preventing individual closures were very limited.
Post offices are still closing every week. More than 150 post offices closed on a long-term temporary basis in 2010 alone. There is no guarantee that they will reopen and many are likely to stay closed indefinitely. As Consumer Focus has said:
“Since the last programme of post office closures finished we have continued to see a dwindling in the overall number of branches”.
According to the National Federation of Sub-Postmasters, 900 post offices, an unusually high number, are currently up for sale. Many sub-postmasters are retiring or leaving the business because of the low levels of revenue generated in sub-post offices and the Post Office is struggling to find alternative premises and service providers.
It is vital that adequate protections are in place to protect rural and urban deprived communities from these closures. I urge support for Amendment 22B which ensures consultation ahead of any post office closure, planned or unplanned, and provides additional protection to rural and urban deprived post offices. I beg to move.
Baroness Wilcox
My Lords, I thank the noble Lord, Lord Young, for his Amendment 22B. An annual report on the Post Office network laid before Parliament is an important means of achieving transparency around the Post Office network. The statutory requirement in Clause 11 to lay such a report before Parliament already goes further than the current requirement in the Postal Services Act 2000, which requires only information about the number and location of post offices and their accessibility. Neither Government nor Post Office Ltd can ensure that no post offices close during the reporting period, nor can they ensure that there is always time to carry out a consultation before an office closes. For example, a sub-postmaster or sub-postmistress may retire or move away, or the premises may be damaged by fire or flooding. After all, 97 per cent of post offices are privately owned and privately operated businesses.