Post Office

Lord Young of Norwood Green Excerpts

Wednesday 27th November 2013 Lords Chamber

[Lord Young of Norwood Green (Lab)]

My Lords, I thank the Minister for repeating the Statement. Let me start by paying tribute to our sub-postmasters up and down the country. They are integral to all our local communities and the social fabric of the country. However, the job of a sub-postmaster has become much more difficult in recent years. Research from the National Federation of SubPostmasters shows that incomes are falling and many work very long hours for very little return.

That situation has not been assisted by the Government, who in 2010 announced plans to use post offices as the “front office for government”. The Government have failed to deliver on that pledge. No new major government services have been awarded to post offices since May 2010. Indeed, the National Federation of SubPostmasters has said that the few new services which have been introduced are one-off transactions available only in a small number of post offices and many services do not make the post office any revenues at all. This resulted in the National Federation of SubPostmasters removing its support for the Postal Services Act. The Government promised £466 million of government work, but the post offices are currently gaining only £130 million from government business. That failure has resulted in the post office network being under more pressure than ever before.

On top of this failure is the abject failure of the network transformation programme as planned. Consumer Futures wrote to the BIS Select Committee just last month showing that only 1,100 have converted to the new models, and the Government require 6,000 by 2015. It shows that the programme is not working, and that is why a degree of compulsion has been introduced.

We can firmly say that today's announcement of additional funding of £200 million on top of the £420 million already trailed beyond 2015 is a vote of no confidence in what this Government are doing to the network. In effect, the Government are increasing the compensation for people to leave and offering more money to convert. Of this, £23 million is for completing a retail survey in order to determine who should be compulsorily converted or removed from the network. If they had delivered on their “front office for government” work, as they said they would, then the £200 million would not be required. It is a payment for failure and yet another broken government promise.

It is true that the National Federation of SubPostmasters voted to approve this yesterday, as most operators feel that the traditional post office model under this Government is not working. Sub-postmasters know that they will now have a degree of compulsion, but they will take the package as they are really struggling. That the federation’s members are voting to support this package so wholeheartedly shows that they want to get out. It is the epitome of taking the money and running. Crucially, this money will be used to subsidise exit from the network rather than to go into the network to make it sustainable in the long term.

We welcome the Government’s commitment to the Post Office card account beyond 2015, although I am not sure how absolute that guarantee is. We also welcome the “last shop in the village and community” post office funding, and support the policy that there will be no compulsion. The £20 million will assist in modernisation and help these vital community assets.

By the end of this process £2 billion will have been spent on network transformation and there is concern that we still do not have a model that is sufficiently attractive to current or future operators. It is true that in the past 7,000 offices were closed, but that was a necessary programme to ensure stability of the network. Is the Minister confident that there are sufficient retailers willing to take on the local model?

The Prime Minister said in PMQs in the other place, in answer to a question from the honourable Member for Argyll and Bute, that,

“we have committed that no post office will close in this Parliament”.—[Official Report, Commons, 23/10/2013; col. 296.]

However, if you stay and convert and have your salary subsidised until 2015, the question is: what will happen beyond 2015? I would also welcome answers from the Minister to the following questions. Will the current criteria be used for compulsion or will they be updated? Will this require a new state aid application? Where does all this current activity leave the Government’s plan for mutualisation? Finally, if other outlets are not prepared to take on a post office when a sub-postmaster leaves the network, what will happen?